What a 2% Dividend Yield Would Look Like at Five Big Techs

Cash dividendsIt seems there comes a time in every big, successful company's life when at least some shareholders start clamoring for a dividend. Cisco (CSCO) CEO John Chambers started talking about initiating a dividend about two years ago, and this week his company finally pulled the trigger. The world's biggest maker of networking equipment said it plans to begin paying an annual dividend with a yield of 1% to 2% by the end of next July.

What took Cisco so long? Well, apart from uncertainty over the states of the economy and credit markets, there are lots of advantages and disadvantages to dividends for both companies and shareholders alike. On the one hand, dividends are hard cash payments to shareholders that can't be faked like earnings. Less attractive is the fact that dividends are taxed twice -- first as corporate earnings and then as personal income.


The list of pros and cons goes on and on, and we're not really interested in that debate here. Rather, we're interested in what isn't up for debate: other big-name tech companies that could afford to start paying a dividend -- but choose not to. Let's take Cisco as a template and apply it to five tech giants that don't pay dividends: Apple (AAPL), Dell (DELL), eBay (EBAY), Google (GOOG) and Yahoo (YHOO).

At Cisco's current share price, an annual dividend yielding 2% would come to 45 cents a share. Multiply that by the number of shares outstanding, and Cisco would have to pay out a total of about $2.5 billion in cash. The company currently sits on about $39 billion in cash and short-term investments, so the dividend payment would equal about 6% of Cisco's cash stash.

That would still leave plenty of money leftover to do deals -- and sponge up stock options through buybacks, if need be -- even with Cisco's $15 billion in total debt.

By this reckoning, have a look at what a 2% yield would amount to for these five dividend holdouts:

Apple
Annual dividend per share: $5.44
Total payout: $5 billion
Cash and short-term investments: $24 billion
Payout as percentage of cash: 21%
Total debt: None

Dell
Annual dividend per share: 25 cents
Total annual payout: $485 million
Cash and short-term investments: $12.4 billion
Payout as percentage of cash: 4%
Debt: $5.26 billion

eBay
Annual dividend per share: 47 cents
Total annual payout: $616 million
Cash and short-term investments: $4.9 billion
Payout as percentage of cash: 13%
Total debt: None

Google
Annual dividend per share: $9.62
Total annual payout: $3 billion
Cash and short-term investments: $30 billion
Payout as percentage of cash: 10%
Total debt: None

Yahoo
Annual dividend per share: 28 cents
Total annual payout: $378 million
Cash and short-term investments: $2.8 billion
Payout as percentage of cash: 14%
Debt: $140 million

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