CSCO vs MSFT: Dividend Yield, Growth & Safety Comparison
Cisco Systems, Inc. (CSCO) and Microsoft Corp (MSFT) are both in the Information Technology sector, making them natural rivals for dividend investors. CSCO offers a significantly higher 1.89% yield compared to MSFT's 0.84%, a gap of 1.05%. Both stocks show similar dividend growth rates, each around 10.1% over the past five years. MSFT holds the edge in dividend safety with a "Safe" rating. MSFT is a Dividend Contender with 20 years of consecutive increases.
Key Metrics Comparison
| Metric | CSCO | MSFT |
|---|
| Dividend Yield | 1.89% | 0.84% |
| Annual Dividend | $1.63 | $3.48 |
| 5-Year CAGR | 10.1% | 10.3% |
| Payout Ratio | 63% | 21% |
| Consecutive Years | 0 | 20 |
| Price | $77.17 | $401.99 |
Yield Comparison
Cisco Systems, Inc. (CSCO) currently yields 1.89%, which is modest for the broader market. That's 1.05% more than Microsoft Corp (MSFT), which yields 0.84%. In dollar terms, CSCO pays $1.63/share annually versus MSFT's $3.48/share.
Dividend Growth
Over the past five years, MSFT has grown its dividend at a 10.3% CAGR compared to CSCO's 10.1%. 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%. MSFT: Dividend growth has been steady, with a 3-year CAGR of 10.4% and a 5-year CAGR of 10.3% (10-year: 9.8%).
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. MSFT's dividend safety is rated "Safe." The payout ratio of 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x. MSFT's payout ratio of 21% is more conservative than CSCO's 63%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in CSCO generates approximately $189/year in dividend income, compared to $84/year from MSFT — a difference of $105/year. At $100,000, that gap widens to $1050/year.
Verdict
- Best for income: CSCO
- Best for safety: MSFT
Frequently Asked Questions
Which has a higher dividend yield, CSCO or MSFT?
Cisco Systems, Inc. (CSCO) has a higher dividend yield of 1.89% compared to Microsoft Corp (MSFT) at 0.84%.
Is CSCO or MSFT a better dividend growth stock?
Microsoft Corp has the stronger dividend growth with a 5-year CAGR of 10.3%, compared to Cisco Systems, Inc.'s 10.1%.
Which is safer for dividend income, CSCO or MSFT?
Cisco Systems, Inc.'s dividend safety is rated "Moderate" while Microsoft Corp is rated "Safe." 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 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x.
How much income does $10,000 in CSCO vs MSFT generate?
A $10,000 investment in CSCO generates approximately $189/year in dividends, while the same amount in MSFT generates about $84/year.
Is CSCO or MSFT a Dividend Aristocrat?
Microsoft Corp is a Dividend Contender with 20 consecutive years of increases. Cisco Systems, Inc. does not currently qualify for aristocrat status.
Which has a lower payout ratio, CSCO or MSFT?
Microsoft Corp has a lower payout ratio of 21% compared to Cisco Systems, Inc.'s 63%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
CSCO vs MSFT: which is better for retirement income?
It depends on your priorities. CSCO for current income, MSFT for safety. Many retirement investors hold both for diversification.
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