Is Cisco (CSCO) One of the Best Dividend Stocks to Buy According to Billionaires?

As an investor, I'm always on the lookout for dividend stocks that offer a mix of stability, growth, and income. cisco systems (CSCO) has caught my eye, with 15 billionaires, including prominent hedge fund managers, investing in the company. But is cisco truly one of the best dividend stocks to buy according to billionaires? Let's dive into the data and find out.

First, let's take a look at Cisco's dividend history. The company has a 15-year track record of increasing its dividend annually, indicating financial stability and reliability. As of March 3, 2025, Cisco offers a dividend yield of 2.56%, which is higher than the average yield of the S&P 500 Index. This high yield provides a significant passive income opportunity for investors.

Cisco's strong financial performance is another factor that makes it an attractive dividend stock. The company generated $15.7 billion in free cash flow (FCF) in 2024, supporting its ability to maintain and increase its dividend payouts. Ameriprise Financial projects a continuous rise in FCF growth through 2027, suggesting that companies with substantial FCF are likely to expand their dividend distributions and share repurchase initiatives in 2025.

Cisco's stable business model is characterized by its recurring revenue streams, which are generated from its networking hardware and software products. This stability enables the company to maintain a strong financial position, even during economic downturns. Cisco's cash flow generation is a critical factor in its ability to maintain and increase dividends. The company's consistent cash flow allows it to distribute dividends to shareholders while also reinvesting in the business for growth.

Now, let's compare Cisco's dividend growth history to other top dividend stocks. Cisco's dividend payout has not increased every year, but there have been periods of growth. For example, the dividend per share increased from $0.06 in 2011 to $0.40 in 2024, representing a significant increase over time. Cisco's dividend yield has also trended upward, indicating that the dividend payout has kept pace with the stock price.

Comparing Cisco's dividend growth history to other top dividend stocks, such as Broadcom (AVGO), Texas Instruments (TXN), and Qualcomm (QCOM), we can observe the following:

1. Dividend Yield: Cisco's dividend yield of 2.53% is lower than Broadcom's (6.20%) and Texas Instruments' (2.74%), but higher than Qualcomm's (2.21%).
2. Payout Ratio: Cisco's payout ratio of 69.73% is lower than Broadcom's (166.48%) and Texas Instruments' (99.92%), but higher than Qualcomm's (35.38%).
3. Dividend Growth: Cisco's dividend growth history shows periods of consistent payouts and growth, similar to other top dividend stocks. However, the specific trends and magnitudes may vary depending on each company's financial performance and dividend policy.

In conclusion, Cisco's stable business model, strong financial performance, and consistent dividend growth history make it an attractive dividend stock in the eyes of billionaires. The company's high dividend yield, stable payouts, and periods of growth indicate a strong dividend performance. While Cisco's dividend yield may not be as high as some other top dividend stocks, its stable business model and cash flow generation enable it to maintain and increase dividends over time. As an investor, I would consider adding Cisco to my portfolio for its attractive dividend growth potential and stable income stream.