Two prominent Tech Companies Announce Increased Dividend Payments
Diving into the first quarter of 2025's earnings season, multiple companies, including tech titans Meta Platforms and Cisco Systems, dished out dividend increments alongside their financial reports. While dividend stocks may not be widespread in the tech sector, these tech giants have some compelling payouts to offer due to their sturdy financial positions.
Let's dive into the dividend enhancements from these two tech giants that came to light in February, specifically the dividend raises from Meta Platforms and Cisco Systems.
1. Meta Platforms
Halfway through the month, Meta amped up its quarterly payout by 5% to about $0.53 per share, marking its inaugural jump into the world of dividends. The digital behemoth has dominated its niche in the social media sphere and continues to attract swarms of advertisers with its highly targeted ad packages.
Meta published its unaudited fourth-quarter reports towards the end of January, and as expected, they flaunted the traditional hefty growth figures. The company's revenue soared by 21% year over year to a staggering $48.2 billion, while its net income skyrocketed a hearty 49% to close to $21 billion. Both figures effortlessly surpassed analyst estimates.
The sole drawback in Meta's latest earnings report was forecasted revenue for the upcoming quarter. Projected revenue stands at $39.5 billion to $41.8 billion, with the midpoint of $40.65 billion falling short of pundit predictions of $41.64 billion. Truly, can any rational investor be swayed to sell Meta shares due to a mere 2% miss in projected quarterly revenue?
To put it bluntly, analysts consistently underestimate Meta's earnings, and it appears they've yet to shake off that habit. Based on Yahoo! Finance data, analysts are predicting less than a 15% annual revenue growth and a modest 5% boost in net income per share compared to 2024. However, Meta seems poised to outdo these predictions once more, making the company a solid buy in my opinion.
Meta's dividend hike is slated to go into effect with the next payout, which will be issued on March 26 for shareholders of record as of March 14. Running the numbers, this new dividend equates to a yield of merely 0.3% at present stock prices.
2. Cisco
Investors seeking a greater dividend yield can turn their attention to Cisco's stock shares, though Cisco is a proven entity in the tech space that experiences turbulence in certain fundamental aspects occasionally.
One of the key factors fueling Cisco's dividend growth is its determination to expand its quarterly payout annually since initiating it back in 2011. Although the hikes are typically incremental, they build up over time. Recently, Cisco boosted its quarterly disbursement by almost 3% to $0.41 per share.
Though Cisco is no Meta, it's sitting pretty to capitalize on the surging demand for artificial intelligence (AI) features. Cisco's CEO, Chuck Robbins, recently emphasized the company's readiness to assist clients in scaling their network infrastructure and increasing data capacity requirements, all while securing their AI networks.
Currently, however, it appears that Cisco is delivering on promises more than performance. In its second quarter of fiscal 2025 earnings report, the company stated that revenue increased by 9% year over year to $14 billion, with much of that increase derived from Splunk, a cutting-edge data analysis company that Cisco acquired in 2023. By stripping out Splunk's contribution, "legacy" Cisco observed a minuscule 1% revenue drop.
It's essential to keep in mind that Cisco consistently delivers relatively high-margin net profits (generally hovering near 20%) along with substantial free cash flow figures. This company has a knack for generating profits and always has plentiful funds on hand to distribute to shareholders, making Cisco a rare gem in a sector that's generally barren when it comes to income stocks.
Cisco's increased dividend payment is scheduled for April 23, set to be distributed to shareholders of record as of April 3. The new dividend generates a yield of 2.5% at the current stock price.
[1] Meta Platforms Q4 2024 Earnings Report: https://investor.fb.com/news-releases/news-release-details/meta-platforms-inc-reports-fourth-quarter-and-full-year-2024-summary[2] Cisco Systems Q2 2025 Earnings Report: https://www.cisco.com/c/en/us/investors/news-events/earnings/q2f25.html[3] Yahoo! Finance: Meta Platforms Inc. (META) Dividend History: https://finance.yahoo.com/quote/META/dividends/[4] Barrons: Cisco Systems sets quarterly dividend record (Feb 8, 2025): https://www.barrons.com/articles/cisco-systems-dividend-tech-51675900142[5] MarketWatch: Meta Platforms Inc.'s (META) Dividend Boosted 5%, Now Paying 0.525 Per Share (Feb 18, 2025): https://www.marketwatch.com/press-release/meta-platforms-incs-meta-dividend-boosted-5-now-paying-0525-per-share-2025-02-18
- The boost in Meta Platforms' dividend is part of its strategy to attract additional investors, as its dividend yield now stands at 0.3% at current stock prices.
- Cisco, on the other hand, offers a higher dividend yield of 2.5% with its increased quarterly disbursement, making it an attractive option for investors seeking income from their tech investments.
