Cisco to pay its first dividend

Cisco plans to pay a dividend to shareholders for the first time in its history.

Cisco plans to pay a dividend to shareholders for the first time in its history.

The rate of the dividend will depend on U.S. taxation of overseas profits. CEO John Chambers told Wall Street analysts Tuesday.

See also: Cisco bolsters Nexus, Catalyst switch lines

Cisco will begin paying the dividend in its current 2011 fiscal year, Chamber said. It will yield 1 per cent to 2 per cent of a shareholder's value in the company, depending on how the U.S. government acts on taxation of overseas profits brought back into the country by American companies.

"We're paying a dividend this year," Chambers told the analysts during Cisco's annual analyst conference in San Jose. "The majority of our shareholders said we should do it."

"It would be a major mistake by this country not to allow repatriation" of profits made overseas, he added. "I think there's a 50:50 chance they'll allow it to happen. It would be an opportunity I'd be surprised our leaders let pass by. We have $US30 billion overseas."

Chambers said the repatriation decision will determine that rate of yield on Cisco's dividend.

"Size and timing of the dividend will be determined in the coming months, taking into consideration tax policy and broader market conditions," Cisco said in a statement.

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