NEW YORK (Reuters) - Cisco Systems Inc plans to pay a cash dividend to shareholders for the first time, trying to appease investors concerned about its growth and eroding margins and sending its shares up nearly 3 percent.
Avian Securities analyst Catharine Trebnick said the quarterly dividend of 6 cents per share, which will be paid to shareholders starting on April 20, broadens the company's appeal to Wall Street as its growth has waned in recent quarters.
"This gives Cisco another class of investors to bring into the stock who are more interested in a dividend payout, rather than high growth," she said.
The move comes as investors have worried about rivals such as Juniper Networks Inc
"Some are saying Cisco's margins are coming down because HP is being more aggressive," Trebnick added.
Its shares were up 48 cents to $17.48 in premarket trading.
(Reporting by Liana B. Baker; editing by John Wallace and Derek Caney)