CSCO vs IBM: Dividend Comparison
Dividend data as of
Cisco Systems, Inc. (CSCO) and International Business Machines Corp (IBM) are both in the Information Technology sector, making them natural rivals for dividend investors. IBM edges ahead on yield at 2.30% versus CSCO's 1.89%. For dividend growth, CSCO leads with a 5-year CAGR of 10.1% versus IBM's 8.9%. Both stocks carry a "Moderate" dividend safety rating. IBM is a Dividend Aristocrat with 30 years of consecutive increases.
Verdict
Yield Analysis
IBM yields 0.41% more than CSCO. In dollar terms, CSCO pays $1.63/share vs IBM's $6.71/share annually.
Dividend Growth
CSCO: Dividend growth is accelerating — the 3-year CAGR of 18.0% exceeds the 5-year rate of 10.1% and the 10-year rate of 8.5%.
IBM: Dividend growth is accelerating — the 3-year CAGR of 16.1% exceeds the 5-year rate of 8.9% and the 10-year rate of 5.9%.
Dividend Safety
CSCO: The payout ratio of 63% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.6x.
IBM: The payout ratio of 60% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in CSCO vs IBM today?
At $77.17 per share, $10,000 buys about 129.6 shares of Cisco Systems, Inc. (CSCO). Each share pays $1.63 per year in dividends, so the position starts out generating roughly $211 per year — about $18 a month.
At $263.04 per share, $10,000 buys about 38.0 shares of International Business Machines Corp (IBM). Each share pays $6.71 per year in dividends, so the position starts out generating roughly $255 per year — about $21 a month.
IBM is the larger income stream from day one: $44 per year more on the same $10,000 invested.
What could $10,000 of CSCO or IBM income look like in 10 years?
Cisco Systems, Inc. (CSCO) has raised its dividend about 10.1% a year over the past five years. If that pace held, the $189 per year that $10,000 generates today at the current 1.89% yield would reach $494 per year by 2036 — a 4.9% yield on the original cost.
International Business Machines Corp (IBM) has raised its dividend about 8.9% a year over the past five years. If that pace held, the $230 per year that $10,000 generates today at the current 2.30% yield would reach $538 per year by 2036 — a 5.4% yield on the original cost.
On those trailing rates, IBM pays more in 2036: $538 versus $494 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would CSCO's dividend growth overtake IBM's higher yield?
Cisco Systems, Inc. (CSCO) yields less today (1.89% vs 2.30%) but has grown its dividend faster — 10.1% vs 8.9% a year over the past five years. If both trends continued, a $10,000 position in CSCO would start out-earning the same position in IBM around 2044 (roughly 18 years from now), paying about $1,064 per year at the crossover. Before that point, IBM pays more each year; after it, the gap compounds in CSCO's favor.
Can CSCO and IBM afford their dividends?
Cisco Systems, Inc. (CSCO) earns $2.59 per share against $1.63 paid out in dividends — 1.6x coverage (a 63% payout ratio).
International Business Machines Corp (IBM) earns $11.14 per share against $6.71 paid out in dividends — 1.7x coverage (a 60% payout ratio).
Coverage is similar for both, so neither dividend looks meaningfully more stretched than the other on current earnings.
Which fits an early-retirement income portfolio better, CSCO or IBM?
For income you need right now, International Business Machines Corp (IBM) leads: $100,000 invested today pays about $192 a month at the current 2.30% yield, versus $157 a month from Cisco Systems, Inc. (CSCO) at 1.89%.
With a decade or more before the income is needed, CSCO's faster dividend growth (10.1% vs 8.9% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
On consistency: IBM has raised its dividend 30 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $595/yr in CSCO vs $675/yr in IBM by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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