Intel Corporation (INTC), Microsoft Corporation (MSFT), Cisco Systems, Inc. (CSCO): Thinking About a Dividend Hike? Think Again

Moreover, Intel claims that its latest chips designed for mobile that are based on the Silvermont architecture are superior to those designed by rival ARM Holdings in terms of power and performance, a claim that ARM vehemently rejects. Only time will tell who is right, but with Intel’s renewed focus on developing mobile chips, I have no doubt that Intel can translate its huge advantages in manufacturing process and R&D to crush its competitors in mobile as well.

But I want dividend growth…

Despite my bullish view Intel’s long-term prospects, there are some investors who might not wish to wait too long for their dividend hike. Such investors can look at Microsoft Corporation (NASDAQ:MSFT) and Cisco Systems, Inc. (NASDAQ:CSCO) as alternative large-cap tech names that pay a healthy dividend.

Microsoft Corporation (NASDAQ:MSFT) has a much lower payout ratio than Intel but the software giant is suffering from many of the same drawbacks as Intel as it vies to make the transition from the PC era into mobile computing. Nevertheless, with a relatively low payout ratio, a healthy yield of 2.9% and a five-year dividend growth rate of 22%, Microsoft Corporation (NASDAQ:MSFT) is an attractive proposition for income oriented investors.

Investors who want to reduce their exposure to the PC names can look Cisco Systems, Inc. (NASDAQ:CSCO) as an alternative. Although Cisco only started paying its dividend from 2011, it has almost tripled its quarterly payouts from $0.06 per share in the first quarter of 2011 to $0.17 per share in the most recent quarter. This amounts to an annualized dividend yield of 2.8% at today’s price. With a payout ratio of 29%, an extremely healthy cash position on its balance sheet and solid revenue growth, I expect Cisco Systems, Inc. (NASDAQ:CSCO) to continue to increase its dividend on a consistent basis.

Foolish take

Many investors were disappointed that Intel did not raise its dividend with the recent announcement. However, keep in mind that Intel already offers one of the highest dividend yields on the market and its cash flow payout ratio is running well above the management’s previously stated target.

Although I don’t expect Intel to raise its dividend any time soon, I am generally bullish on the company and expect it to raise its dividend once it starts to see the benefits of its recently launched products.

For those investors who are looking to diversify away from PC exposure, I would recommend Cisco Systems, Inc. (NASDAQ:CSCO) as an alternative.

The article Thinking About a Dividend Hike? Think Again originally appeared on and is written by Zain Zafar.

Zain Zafar has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems and Intel. The Motley Fool owns shares of Intel and Microsoft.

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