The Thinking Behind Cisco's Dividend Growth

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Sept. 13 (Bloomberg) -- In today's "This Matters Now," Frank Calderoni, CFO at Cisco, talks with Tom Keene about the company’s dividend growth and decisions on putting cash to work within the company. He speaks on Bloomberg Television's "Bloomberg Surveillance."

I'm tom.

Franco the romney -- frank calderoni, chief financial officer of cisco.

If the dividend does not grow, he will be out on the street.

This is exciting to me -- never have a dividend, heaven forbid, and all of a sudden the use of cash.

How important is a dividend to you and john chambers?

Or are you sort of faking it?

I think it is very important.

We talk a lot to investors and we have been talking about what is important to them.

A little over two years ago we did not have a dividend and now we have one of the highest yielding dividends in technology, just under three percent yield currently in a matter of a little over two years.

It is listening to investors, what is important to them.

We started with a low dividend and we increased it cents.

It also shows the level of confidence we have as a board and management.

What is the dividend growth?

I don't want to pin you down, but is a double-digit or is it angled digit?

Verizon, where it is barely growing, or would you make it pop?

In a little over two years we increased it twice.

We have been showing support for the dividend.

One of the key things we let out to investors, in addition to returning cash to shareholders we want to set a minimum of 50% annual free cash flow that we will contribute to the dividend and stock buyback.

I love that.

I know you are a big company.

If anonymous gdp -- a phenomenal gdb play.

But you have guys whispering in your ears, save the dividend growth for investment.

We have cash, $50 billion of cash.

We want to use the cash to return to shareholders but also to continue to make investment in our business to grow in the three percent to five percent range -- i am sorry, five percent to seven percent in three to five years.

We do that through organic as well as acquisitions.

All executives walk up to the cfo's desk and there is a big sign flashing, no.

What does it take to get you to say yes?

We look at our portfolio on a regular basis and it is making the trade-offs.

What are the areas we want to make an investment in?

We look at what has the opportunity to not only grow topline but bring the return.

Those investments that come forward to me that have good returns over the longer term, but at the same time we have to make decisions in the portfolio to back off on some we may have done five or 10 years ago.

I have a million questions.

We will come back.

And also, frank calderoni on verizon.


This text has been automatically generated. It may not be 100% accurate.


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