Cisco (NASDAQ:CSCO) and Oracle (NYSE:ORCL) are often considered conservative dividend plays for long-term investors. Let's take a closer look at Cisco and Oracle's dividends, sales growth, and valuations to decide which "mature" tech stock is the better income investment.

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Source: company websites

Dividend basics
Cisco pays a forward annual dividend of 3.1% -- more than double Oracle's 1.5% yield. Over the past 12 months, Cisco paid out 37% of its free cash flow (FCF) as dividends versus 19% for Oracle. Cisco's superior yield and payout ratio make it look more "generous," but it also means Oracle has more room to grow its dividend. Over the past five years, Oracle's trailing 12-month FCF has risen 53% compared to Cisco's 18% gain.

Cisco introduced its dividend in 2011, which it raised annually every year. The company raised its dividend an average of 15% over the past three years. Oracle started paying its dividend in 2013, but only raised its dividend once earlier this year, by 25%.

The numbers that matter
Based on those figures, Cisco looks like the better dividend stock, but both companies also need healthy top- and bottom-line growth to keep paying out dividends. Over the past five years, Oracle's revenue and earnings growth have outpaced Cisco's.

That's because Oracle is primarily a higher-margin software company, while Cisco is a lower-margin hardware one.

CSCO Revenue (TTM) Chart

Source: YCharts

In fiscal 2015, 77% of Oracle's revenue came from its software and cloud businesses, while 14% came from hardware and 9% came from services. Oracle's total software and cloud revenues rose about 1% annually, but new software-license revenue -- a key metric of market demand -- slipped 9.4%. Operating margins also declined from 39% in 2014 to 36% in 2015, which caused net income to fall 9.3%. Total revenue remained flat on a year-over-year basis.

Oracle posted over 30% annual sales growth in the critical growth areas of software, platform, and infrastructure as a service, which generated $2.1 billion in combined revenues last year. But that growth lags behind market leaders like Amazon (NASDAQ:AMZN), which grew its AWS cloud service revenue by 49% annually last quarter with an annual run rate of $6 billion.

By comparison, 77% of Cisco's revenue came from hardware and 23% came from its services during the first nine months of fiscal 2015. The bulk of Cisco's hardware revenue comes from sales of routers, switches, and other networking equipment, which all face stiff competition from lower-priced rivals like ZTE and Huawei. But thanks to its ongoing shift toward higher-margin security software and services, Cisco's operating margins have held steady in the high teens and lower 20s over the past five years. During the first nine months of 2015, Cisco's revenue and net income respectively rose 4.4% and 18.8% annually.

Valuations and the future
The numbers tell us that although Oracle has a history of stronger sales and earnings growth, Cisco is clearly posting better growth this year. Oracle currently trades at 18 times earnings, which is significantly lower than the industry average P/E of 37 for the application software sector. Cisco has a P/E of 16, which is also lower than the industry average of 20 for the networking equipment sector.

Looking ahead, Oracle will keep playing catch-up in cloud services -- a market that is now crowded with massive rivals like Microsoft, Google, and IBM. The fierce competition between these companies is already lowering price expectations across the market, so Oracle's margins could decline further if it lowers prices to remain competitive.

Cisco, on the other hand, will likely leverage its dominant position in networking hardware to sell more software through hardware/software bundles. In the past, that tactic crushed smaller rivals like Aruba Networks, which was acquired by Hewlett-Packard earlier this year. But it's still unclear if that strategy will work against disruptive Chinese rivals like Huawei.

The winner: Cisco
Cisco and Oracle both face big challenges over the next few years. But Cisco is the better long-term dividend pick for three simple reasons: it has a better yield, a more consistent history of dividend hikes, and better top- and bottom-line growth over the past year. Oracle has the free cash flow to pay bigger dividends, but it doesn't seem interested in boosting its yield for income investors.

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Cisco Systems, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Google (A shares), Google (C shares), and Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.