CSCO vs IBM: Dividend Yield, Growth & Safety Comparison
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.
Key Metrics Comparison
| Metric | CSCO | IBM |
|---|
| Dividend Yield | 1.89% | 2.30% |
| Annual Dividend | $1.63 | $6.71 |
| 5-Year CAGR | 10.1% | 8.9% |
| Payout Ratio | 63% | 60% |
| Consecutive Years | 0 | 30 |
| Price | $77.17 | $263.04 |
Yield Comparison
International Business Machines Corp (IBM) currently yields 2.30%, which is solid for the broader market. That's 0.41% more than Cisco Systems, Inc. (CSCO), which yields 1.89%. In dollar terms, IBM pays $6.71/share annually versus CSCO's $1.63/share.
Dividend Growth
Over the past five years, CSCO has grown its dividend at a 10.1% CAGR compared to IBM's 8.9%. 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's dividend safety is rated "Moderate." 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's dividend safety is rated "Moderate." 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. Both have similar payout ratios — CSCO at 63% and IBM at 60%.
Income Comparison
A $10,000 investment in IBM generates approximately $230/year in dividend income, compared to $189/year from CSCO — a difference of $41/year. At $100,000, that gap widens to $410/year.
Verdict
- Best for income: IBM
- Best for growth: CSCO
Frequently Asked Questions
Which has a higher dividend yield, CSCO or IBM?
International Business Machines Corp (IBM) has a higher dividend yield of 2.30% compared to Cisco Systems, Inc. (CSCO) at 1.89%.
Is CSCO or IBM a better dividend growth stock?
Cisco Systems, Inc. has the stronger dividend growth with a 5-year CAGR of 10.1%, compared to International Business Machines Corp's 8.9%.
Which is safer for dividend income, CSCO or IBM?
Cisco Systems, Inc.'s dividend safety is rated "Moderate" while International Business Machines Corp is rated "Moderate." 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. 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.
How much income does $10,000 in CSCO vs IBM generate?
A $10,000 investment in CSCO generates approximately $189/year in dividends, while the same amount in IBM generates about $230/year.
Is CSCO or IBM a Dividend Aristocrat?
International Business Machines Corp is a Dividend Aristocrat with 30 consecutive years of increases. Cisco Systems, Inc. does not currently qualify for aristocrat status.
Which has a lower payout ratio, CSCO or IBM?
International Business Machines Corp has a lower payout ratio of 60% compared to Cisco Systems, Inc.'s 63%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
CSCO vs IBM: which is better for retirement income?
It depends on your priorities. IBM for current income, CSCO for dividend growth. Many retirement investors hold both for diversification.
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