Cisco Systems Has Connections

Every New York stock exchange trading day I'm posting a daily dividend stock or fund review. I'll share the three chief qualities of just one equity or fund that could be selected for a dividend stock portfolio I've named the Safari to Sweet Success.

This week my latest portfolio seeks a high-yield and growing stock in the technology sector. That sector includes nineteen industries ranging from communication equipment, computers, consumer electronics, and contract manufacturing, to health and information technology and services to internet, scientific instruments, software, solar and all such technological enterprises.

Today I'm reviewing a communication equipment firm. It's a large-cap stock with a market capitalization of over $10 billion. Its name is Cisco Systems, Inc. Its trading ticker symbol is CSCO

Cisco Systems Inc is a supplier of data networking equipment and software. Its products include routers, switches, access equipment, and security and network management software which allow data communication among dispersed computer networks.

Cisco Systems serves businesses of various sizes, public institutions, governments, and service providers.

The company sells its products directly, as well as through channel partners, such as systems integrators, service providers, other resellers, and distributors.

The company was founded in 1984 and is headquartered in San Jose, California.

I use three key data points gauge the value of any dividend equity or fund like Cisco Systems (CSCO): 

(1) Price

(2) Dividends

(3) Returns

CSCO Price

Cisco Systems's price was $43 per share at Friday's market close. A year ago its price was $32.42 for a gain of $10.58 per share. 

Assuming Cisco Systems's price will trade between the range of $32 to $60 next year, its price could grow another $10.58 from $43 to $53.28 by April, 2019. 

CSCO Dividends

Cisco Systems's most recent quarterly dividend was $0.33 declared in February, to be paid April 25. Four payouts of $0.33 peg the annual amount at $1.32 for a yield of 3% at Friday's $43.00 share price. 

Gains For CSCO?

Adding the $1.32 estimated annual dividend to the $10.58 estimated year over year price gain makes an $11.90 projected gross annual gain, which will be reduced by the cost to trade these shares. 

$1,000.00 invested today at the $43.00 price buys 23 shares. 

A $10 broker fee paid half at purchase and half at sale costs about $0.43 per share Subtracting that $0.43 brokerage cost from the estimated $11.90 gross gain leaves a net gain of $11.47 X 23 shares = $263.81 or a 26% potential net gain on a $989.00 investment.

Therefore, Cisco Systems, Inc (whose ticker symbol is CSCO), now shows a possible 26% net gain including a 3% dividend yield. 

29 analysts cover this stock. Of those 29: 13 say buy; 7 say outperform, 9 say hold, none say underperform, or sell.

The current stock price has fallen 5.5% from a peak of $45.55reached March 12, 2018 to its recent $43.00. 

The 29 analysts median target price estimate is at $48.78 which is $3.50 below my year over year calculation of $53.28. A year from now we'll look back to see who's closest.

Those forward-looking numbers were conjecture based on past year performance. The actual results remain to be seen. They could turn out to be far higher or lower. More study is required for you to determine if Cisco Systems, Inc. (CSCO) is worth your time and mone.

Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, ...

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Moon Kil Woong 6 years ago Contributor's comment

Cisco is slowly turning into a better stock, however, the hardware side of the tech business has not been a good place to put your money. Sadly, a lot of the networking growth has been centered on crypto currencies as well. I'd stay clear until there is a clear need for more network bandwidth.