At first glance, Cisco (NASDAQ:CSCO) and General Electric (NYSE:GE) don't seem that similar. The former sells networking hardware and software, while the latter sells a wide array of industrial products and services for the utility, healthcare, transportation, aviation, and automotive industries.

But if we look closer, some similarities appear. Both companies are Dow components and are generally owned for income instead of growth. Both companies are also aggressively expanding into the Internet of Things (IoT), which links various objects to each other and the cloud. Cisco estimates that the total number of connected devices across the IoT, including GE's industrial machinery, will double from 25 billion in 2015 to 50 billion in 2020.

Cisco and GE are both aggressively expanding into the Internet of Things.

Image source: Getty Images.

Cisco and GE are both slow-growth plays, yet both stocks have rallied more than 50% over the past five years. But since past performance doesn't guarantee future gains, we should take a closer look at their core businesses to see if they can keep rising over the next few years.

How fast are Cisco and GE growing?

Cisco's revenue stayed nearly flat at $49.2 billion in fiscal 2016. But after excluding the sale of its set-top box to Technicolor for $600 million, its full-year revenue rose 3% to $48.7 billion. Cisco's revenue grew 1% annually on that same "normalized" basis during the first quarter, but is expected to decline 2%-4% annually during the second quarter. Analysts expect Cisco's reported revenue to fall 2% in fiscal 2017, but potentially rebound 2% in 2018.

That lackluster growth is mainly attributed to the sluggish growth of its core businesses of networking routers and switches, which generated nearly half its revenue last quarter. The only part of Cisco which posts consistent growth is its cybersecurity business, which posted 11% sales growth during the first quarter but only accounts for 4% of its top line. Looking ahead, Cisco is expected to acquire more companies to strengthen its hardware and software bundles while boosting its top line growth.

Cisco Systems is one of the largest networking hardware and software companies in the world.

Image source: Cisco.

General Electric's revenue rose 5% to $123.7 billion in fiscal 2016. The company's top line received a big boost from its $10 billion purchase of Alstom's power division in late 2015. GE's core businesses also grew on robust demand across the aviation, renewables, healthcare, and oil and gas industries. Its healthcare business benefited from solid growth in China, and its oil and gas business was lifted by rebounding oil prices. Orders for wind turbines also rose on an increased appetite for renewable energy solutions worldwide.

GE's backlog -- a key indicator of future demand -- rose 2% to $321 billion in 2016. Looking ahead, analysts expect GE's revenue to rise 2% in fiscal 2017 and 7% growth in 2018. But on an organic basis, which excludes currency impacts, acquisitions, and divestments, GE expects its revenue to rise 3%-5% in fiscal 2017.

How profitable are Cisco and GE?

Since Cisco and GE are both heavily exposed to currency headwinds and often acquire or divest units, which distorts year-over-year comparisons, they report their earnings in both GAAP and non-GAAP figures.

On a non-GAAP basis -- which excludes currency impacts, stock-based compensation, certain acquisitions, divestments, and other charges -- Cisco's earnings rose 8% in fiscal 2016. GAAP-adjusted earnings, which include the gain from the set-top box divestment, rose 21%. Analysts expect Cisco's non-GAAP earnings to remain nearly flat in 2017 and rise 5% in 2018.

GE's total earnings remained flat on a GAAP basis in fiscal 2016. However, its non-GAAP earnings (which include its industrial operating and related verticals) rose 14% during the year. On that basis, analysts expect GE's earnings to rise 10% in 2017 and another 16% in 2018.

Dividends and valuations

Cisco currently pays a forward yield of 3.3%, which is supported by a payout ratio of 47%. It's raised that dividend annually for the past six years. GE also pays a forward yield of 3.3%, but it has a much less sustainable payout ratio of 106%, due to the Alstom acquisition throttling its cash flows. GE raised its dividend by a penny last December, but that was its first hike in two years.

Cisco trades at 15 times earnings, which is lower than the S&P 500's current P/E of 24 and the industry average of 25 for networking and communication device makers. GE trades at 25 times earnings, which is higher than the S&P 500's multiple but lower than the average P/E of 39 for diversified machinery companies.

The winner: Cisco

General Electric initially seems like a better pick than Cisco, since it has better top and bottom line growth and a more diversified business. But GE's poor record of dividend hikes, high payout ratio, and frothy valuation indicate that it's a riskier buy than Cisco at current prices. With the market hovering near all-time highs, I'd rather stick with Cisco as a fundamentally cheap play with a reliable dividend.

Leo Sun owns shares of Cisco Systems. The Motley Fool owns shares of General Electric. The Motley Fool recommends Cisco Systems. The Motley Fool has a disclosure policy.