We're in the throes of 2025's first earnings season, and like any earnings season, a host of companies declared dividend increases alongside their quarterly fundamentals. While the growth-focused tech sector has never exactly been a hotbed of dividend stocks, there are some attractive payouts from cash-rich companies.
Let's dig into a pair of dividend raises from big tech players that were declared this month -- that of Meta Platforms (META -1.76%) and Cisco Systems (CSCO 0.39%).
In the middle of the month, Meta bumped its quarterly payout 5% higher to just under $0.53 per share. This is actually a historic event, as it's the first time the social media giant pulled the lever on a raise (although to be fair, it only started doling out a dividend in early 2024).
Meta continues to be the dominant operator in the social media sphere, a position that no company has even come close to approaching. As ever, advertisers keep flocking to it to place spots microtargeted to potential buyers of their products or services.
The company published its fourth-quarter results at the end of January, and to no one's surprise, they showed the usual chunky growth numbers. Revenue advanced by 21% year over year to more than $48 billion, while net income leaped 49% to nearly $21 billion. Both figures easily topped the consensus analyst estimates.
The only real sour note in Meta's earnings report was revenue guidance for its current (first) quarter. Management is expecting to post a top line of $39.5 billion to $41.8 billion. The midpoint of that range, $40.65 billion, is under the average pundit projection of $41.64 billion. Really, though, is any sensible investor going to sell out of Meta because of a 2% miss in projected quarterly revenue?
Analysts have frequently underestimated Meta's power to earn and profit, and it seems to me they haven't shed the habit. According to Yahoo! Finance, collectively they're anticipating less than 15% growth in annual revenue and a 5% improvement in per-share net income for this year compared to 2024. I feel another series of beats coming on, so Meta continues to be a buy, in my view.
The company's dividend raise kicks in with the upcoming payout, which will occur on March 26 for shareholders of record as of March 14. At the stock's current price, the new dividend's yield would be 0.3%.
A much higher dividend yield can be had from an investment in Cisco stock; the trade-off is that, compared to the youthful social media titan, the networking company is an established operator that suffers declines in key fundamentals at times.
One aspect of Cisco's business that consistently improves its dividend. It's been adding to the quarterly payout every year since initiating it in 2011, and although those hikes are usually incremental, they add up. The quarterly distribution has risen nearly sevenfold from $0.06 per share to the present level, which was recently given a nearly 3% boost to $0.41 per share.
Cisco isn't Meta. Nevertheless, it's standing in front of a fine opportunity to expand its business -- the heavy demand for artificial intelligence (AI) functionalities.
In its second quarter of fiscal 2025 earnings report, the company quoted CEO Chuck Robbins as saying, "As AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security."
Just now, though, that seems to be more promise than performance. For that quarter, revenue rose by 9% year over year to $14 billion, but much of that increase came from Splunk, a next-generation data analysis company Cisco acquired in 2023; the acquisition closed early the following year. Splunk is now incorporated into Cisco's results -- stripping it out, "legacy" Cisco saw a 1% revenue drop.
That being said, with rare exceptions, Cisco reliably posts both relatively high-margin net profits (usually in the vicinity of 20%) and free cash flow figures well in the black. This is a company that knows how to make decent coin and always has plenty on hand to pass along to investors. It's a rare income stock in a sector that's something of a desert for such titles.
Cisco's raised dividend is to be distributed on April 23 to investors of record as of April 3. It yields 2.5% on the current share price.
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