These two U.S.-based tech leaders continue to shift to new fields as demand for their legacy products decline. Those moves are starting to pay off in the form of higher earnings and stock prices. Their success will also give them more cash to keep raising their dividends.
MICROSOFT CORP. $102(Nasdaq symbol MSFT; High-Growth Dividend Payer Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.7 billion; Market cap: $785.4 billion; Dividend yield: 1.6%; Dividend Sustainability Rating: Highest; www.microsoft.com)is the world’s largest software company. Its Windows operating system powers about 90% of the world’s personal computers.
The company began paying regular dividends in 2004. It last raised the quarterly payment by 7.6% in December 2017, to $0.42 a share from $0.39. The annual rate of $1.68 yields 1.6%.
Most of Microsoft’s recent growth stems from its 2014 decision to focus on cloud-computing services.
In the three months ended March 31, 2018, Microsoft’s revenue rose 15.5%, to $26.8 billion from $23.2 billion a year earlier. The company earned $7.4 billion, or $0.95 a share. That’s an increase of 35.3% from $5.5 billion, or $0.70 a share, a year earlier.
Microsoft also continues to use acquisitions to spur its growth. In June 2018, it paid $7.5 billion for GitHub, a company that provides software developers with a platform for learning about and developing software.
The company’s strong balance sheet can support those investments. As of March 31, 2018, it held cash of $132.3 billion, or $17.20 a share. Its long-term debt of $73.5 billion is a low 9% of its market cap.
Microsoft trades at 26.6 times the $3.83 a share it should earn in fiscal 2018. That’s a reasonable multiple in light of its successful shift to subscription-based sales revenue.
Microsoft is a buy.
CISCO SYSTEMS INC. $44(Nasdaq symbol CSCO; High-Growth Dividend Payer Portfolio, Manufacturing sector; Shares outstanding: 4.7 billion; Market cap: $206.8 billion; Dividend yield: 3.0%; Dividend Sustainability Rating: Above Average; www.cisco.com)makes hardware and software that links and manages computer networks.
The company paid its first quarterly dividend of $0.06 a share in March 2011. Since then, it has increased that payout eight times. Cisco’s current quarterly dividend of $0.33 offers an annualized yield of 3.0%.
In response to stronger competition from lower-cost, generic routers and switches, Cisco has shifted its focus to faster-growing markets such as computer security systems and software.
In the three months ended April 28, 2018, overall revenue rose 4.4%, to $12.5 billion from $11.9 billion a year earlier. Revenue was higher mainly due to stronger results in Europe, the Middle East and Africa.
Excluding one-time items in the quarter, the company earned $3.2 billion. That’s up 5.6% from $3.0 billion a year earlier. Due to fewer shares outstanding, earnings per share gained 10.0%, to $0.66 from $0.60.
Cisco recently paid $270 to acquire Accompany, a California-based business that provides an artificial intelligence sales platform for finding new clients.
Thanks to this acquisition and others, the company’s recurring revenue from software and services supplied 32% of the total for the third quarter. That’s up from 30% a year earlier.
The company will probably earn $2.59 a share in fiscal 2018. The stock trades at 17.0 times that forecast. That’s a particularly attractive multiple, as the company spends a high 13% of its revenue on research.
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Privacy Policy and Terms of Use
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
The privacy of the site/store visitor is very important to TSI Network, and is respected at all times. The information we receive from customers helps us to personalize and continually improve your online experience at TSI Network.
We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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Information from Other Sources: For reasons such as improving personalization of our service (for example, providing better product recommendations or special offers that we think will interest you), we might receive information about you from other sources and add it to our account information. We also sometimes receive updated delivery and address information from our shippers or other sources so that we can correct our records and deliver your next purchase or communication more easily.
We do reserve the right, however, to collect and perform statistical analyses of the internet traffic to our website for our internal use. However, information collected does not allow us to identify any individual, and will not collect any personal information of the visitor. Furthermore, we do not sell, rent or loan to any outside parties the information collected and analyzed.
Although you may be able to access some of our websites without being required to register or provide personal information, certain websites and sections of our websites may require registration. In addition, if you choose to contact us to ask a question, we will collect your personal information so that we can respond to your question.
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Cookies are alphanumeric identifiers that we transfer to your computer's hard drive through your web browser to enable our systems to recognize your browser and to provide features like "Remember Me" for our paying subscribers. Cookies are also used during the ordering process to help ensure your order is handled correctly. We do not extract any information about individual users or their computers as a part of this process.
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Does TSI Network Use the Information It Receives?
"Contact Us" and Comment Features: TSI Network encourages visitors to its websites to contact us with questions and comments. Email addresses and other information of persons using these features may be collected in order to facilitate our responses to those inquiries.
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Except as provided herein, TSI Network will not sell or rent personal information about you to unaffiliated third parties.
We may disclose personal information you have provided through our websites, for the above purposes, to persons or companies that we retain to carry out and other activities for which you have registered or in which you have otherwise asked to participate. In particular, we may for these purposes transfer information to any country (including the USA and other countries which may not offer the same level of data protection as Canada). We also will disclose personal information if required by law, including compliance with warrants, subpoenas or other legal processes.
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COMMENTS: TERMS OF USE
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TSI Network does everything possible to prevent unauthorized intrusion to its websites and the alteration, acquisition or misuse of personal information by unauthorized persons. Notably passwords submitted by users of our websites are encrypted using encryption mechanisms. However, TSI Network cautions visitors to its websites that no network, including the Internet, is entirely secure. Accordingly, we cannot be responsible for loss, corruption or unauthorized acquisition of personal information provided to our websites, or for any damages resulting from such loss, corruption or unauthorized acquisition.
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TSI Network has procedures in place to keep your personal information accurate, complete and current for the purposes for which it is collected and used. You may review the information that you have provided to us and where appropriate you may request that it be corrected. If you wish to review your personal information please send a request to: service@tsinetwork.ca.
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Changes to this Policy
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TSI Network may revise this Policy from time to time.
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Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
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