Cisco vs. IBM: Two Tech Giants' Dividend Stories in the Spotlight
Cisco Systems (CSCO) and International Business Machines (IBM) are two technology giants that have been paying dividends to their shareholders for years. However, their dividend stories couldn't be more different. Cisco's A- grade reflects its strong growth, with a 62% annual stock gain and AI-driven revenue of $63.33 billion in the last fiscal year.
Cisco's quarterly payment of $0.42 is small in absolute dollars, but the underlying engine is what matters. The company has been raising its dividend annually, from $0.06 in 2012 to its current level. Its stock price has appreciated by 44.52% year-to-date and 62.11% over the past year.
IBM's dividend story is more about endurance than growth. It has a 31-year streak of increasing its quarterly payments, with the latest being $1.69 per share. However, this comes at a time when IBM's revenue growth is stalled at just 1%, and it's facing a securities fraud inquiry into pipeline disclosures.
Cisco's stock price of $108.65 is significantly lower than IBM's $230.75, which has declined by 20.29% year-to-date and 2.5% over the past year. The two companies will face key tests in their upcoming earnings reports, with Cisco's fiscal Q1 report set to test whether its AI order momentum sustains its FY2027 guide.
IBM's Q3 report needs to prove that it can deliver on its second-half free cash flow promise, while the outcome of the pipeline-disclosure inquiry will reset the risk premium on its $6.76 annual payout.