Cisco
systems, symbol CSCO is in so many technology portfolios including mine. Those
of us who are long are eternal optimists.
It is a quality company however, the stock is not quite a Dividend
Machine and one could think of it as dead money. I have several reasons to hold
this stock and they are outlined below.
Paid
to wait:
CSCO
has paid dividends for the past four years.
Their most recent dividend was $.21 in March of 2015 for a forward yield
of 3.032%. I have been waiting a long
time for CSCO to perform and there is no question that I have a gain of over
20% but I sure would like a lot more.
Since technology is gradually inching the way back from the debacle of
the dot com bust in 2001, I can hold onto CSCO because of the dividend.
Increasing
Income:
Once
CSCO decided to pay dividends, it has increased the payout with gusto. They paid their first dividend four years
ago at the rate of $.06 per share per quarter.
Their most recent dividend was $.21 and that is an average annual
increase of 6.25% per year. This is very
a respectable dividend growth history.
Solid
Fundamentals:
CSCO
is not a Dividend Machine because I require at least a 3.5% dividend yield and
a five year average dividend growth rate of 4% or more for a stock to qualify as a 2015 Dividend Machine. CSCO’s current yield is only just above 3%
and their dividend history spans only four years.
Yet
as you can see by the data presented in the table below, CSCO is a solid
stock. Earnings per share are $1.66 and
D/E ratio is .34.
Covered
Calls:
CSCO
has not had great covered calls over recent years but today I was able to sell
a July $30 for $.35. My cost basis is
$23 but even if you bought CSCO today, the call makes sense. See the table below.
I
am holding CSCO for a while longer and these four reasons are why.
Disclosure: Long CSCO with calls
