Lanny’s Recent Stock Purchase – Cisco (CSCO) X 2

The captain is back in the steering wheel and I directed the ship to another stock investment purchase.  This so happened to occur on August 1st and felt nice to start the month off with deployment of fresh capital.  As I look to close out the last 5 months of the year strong, i made an additional investment purchase into Cisco (CSCO) as the dividend metrics were right up my alley.  It’s time to jump into my stock purchase, in order to find out why and how the dividend metrics appeared.

the stock – cisco (Csco)

Cisco is a new dividend growth stock, who has grown dividend for over 5 years now, since the introduction of their dividend.  Further, from review of other press releases, they have quite a few acquisitions going on, centered around cloud computing and artificial intelligence, which are two areas that I find to be heavily relevant and heavily forthcoming in the future of technology.  This provides evidence that Cisco (CSCO) wants to maintain on the path or stay ahead of the curve against other competitors in the industry.  I have purchased Cisco once before, approximately 7 weeks before this, back in June and their stock price hasn’t budged.  In addition to purchasing them before, they were also on my dividend stock watch list for August.  There has been a trend, i see, that I have purchased Cisco on a few recent releases of my watch list.  Coincidence?  Can I make it three times a charm?  We will have to see on that  Further, I did receive my first dividend income check in July from Cisco, and let’s just say, I want that month to have stronger income and what better way than to add to my current position here.

Now I know I had mentioned to take a look at their dividend metrics, as of August 1st (date of purchase), so let’s get to it!

1.) Price to Earnings (P/E) – CSCO was trading at $31.5281 when I purchased them on forward expected earnings of $2.38, equates to a P/E of 13.24 – which is FAR below the S&P 500 and is slightly below a few companies within the technology sector.  This shows signs of undervaluation.

2.) Dividend Yield – At the time/date of purchase, the yield was at a solid 3.68%.  This yield is far greater than my individual stock portfolio yield, currently.  What’s even better is this yield, compared to their 5 year average of 2.80% roughly (find why I compare to the 5 year average); shows an 88 basis point difference, equating to a slight sign of undervaluation.

3.) Dividend Growth – They are going on 5+ years of dividend growth and believe, that with a payout ratio of 48.7%, that they still have room to grow.  Their growth this year was 11.5%, or half of the prior year, therefore, I would expect a 7-9% dividend growth going forward, which pairs well with their higher yield.

To show the evidence, here is a screen shot of my purchase:

I purchased $1,250 worth at $31.5281 per share for a total of 39.5218 shares, with a $3.95 trading fee.  This added $45.85 to my forward dividend income.  This purchase almost directly mirrors my first purchase, to a damn “T”, it is quite hilarious.  I have never been so close in price on a purchase and the capital ends up being the same, as well.  The additional income that was added was also the exact same as the first purchase, essentially doubling it.  I strongly believe that Cisco’s balance sheet, plus their investments in the right technology, should allow them to be extremely profitable going forward, which will allow for future dividend payments & increases.

Cisco (csco) stock purchase X2 summary & conclusion

The purchase of Cisco increased my position within my portfolio and has doubled my dividend going forward, as well.  That, of course, is the best part of this purchase!  With over $90 in forward income, I am almost set to reinvest at 3 shares per year, barring no movement in share price.  I was quiet through the last half of June, the entire month of July, but was finally able to make a decision.  The additional forward income pushes me towards the dividend goal within my goals set for 2017.

I have seen so many purchase of Cisco as of late, it’s been quite interesting.  I am shocked that the stock price literally didn’t move for 45 days, or the time of my purchase.  I am lucky enough to have had capital on the sidelines, waiting to be investing into a high quality company.  I have a few questions for the readers, in regards to this purchase.  Do you like Cisco’s position within the Information Technology sector at the moment?  Do you believe this is one of those “legacy” companies that will be around to withstand the test of time and advancement?  Would you buy them?  Appreciate the feedback and responses.  Good luck and happy investing, as always!

-Lanny

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31 thoughts on “Lanny’s Recent Stock Purchase – Cisco (CSCO) X 2

  1. Lanny,

    Great purchase! Definetely a long term play. Cisco isn’t going away anytime soon. I’m also on the brink of buying some more. Just waiting for a few more dividends to hit my account, so that I have enough money to buy a round number of shares (my broker doesn’t offer partial shares).

    SD

  2. Always a big fan of CSCO. The stock, the company, and their products. I think they will be around for a while. Just hope they can keep the dividends coming and increasing. Adds a nice bit of dividend income for you as well. Great buy!

    • DDaze –

      Yep, I think their assets are strong enough to keep acquiring if need be and developing their products/services for current and future customers. Let’s just say – not sure what company can shake them up. I think we see dividends for a long time to come.

      -Lanny

  3. CSCO is a great company. Many could feel that they stuck in it as while the rest of the market is soaring, their share price is like frozen for a year. But I’m a firm believer that it’s a good long term play and those who want to slowly build a bigger position in it can actually benefit from the recent flat share price.

    • Runner –

      It’s funny. Flat for a year, but yet they increased their dividend double digits earlier this year : ) Always bodes well for dividend investors. Why? Because price appreciation doesn’t matter to us!!

      -Lanny

  4. I like the purchase. Like I stated on one of your other posts, this holding currently has a pretty sizeable chunk of my portfolio. Hoping for a turnaround in the near future to the similarities of MSFT. Old legacy company takes a while to turn the ship!

    ADD

    • ADD –

      Legacy does take time, and that’s what causes them to be a legacy – long hull running! Looking forward to their ability to innovate and be ahead of the curve. Pumped to DRIP more now going forward.

      -Lanny

  5. Can’t argue with this purchase at all. Solid company. Safe, growing dividend. Undervalued by several metrics.

    My CSCO position is rapidly approaching “full” (244 shares), but it is one of the more attractively priced dividend stocks out there right now, so it’s still very tempting to add to it.

    I’m interested to see what happens after they announce earnings next week. The last couple earnings days have been pretty volatile. So you might finally get some of the movement you’ve been missing.

    Since I already have so many shares, I might hold off unless the share price starts to push a 4% yield (or I can get one through options).

    4% yield would be $29/share based on the current dividend, which has a nice ring to it.

    • CFW –

      If CSCO goes under $30, I think you’ll see activity heat up from the dividend investing communty, even more so than it already has. The metrics staring me in the face keeping saying, “Buy me”, and let me tell you, it’s hard not to keep buying. I sit here and am still debating on grabbing more to reach a position that’s solid for the portfolio – currently over 40 shares now, and 100 sounds nice… haha.

      -Lanny

  6. Keep building that passive income stream. I think I need some help getting my feet wet in tech for my own DGI portfolio. Looks like CSCO has all the good metrics for a long term dividend growth stock even though many consider it a legacy player. Bottom line, I don’t foresee any changes in the switches and hubs market for networking. We’ll need CSCO products for a long time to come.

  7. Lanny,
    I am trying to keep Tech a low % of my overall portfolio and right now between AAPL, MSFT, and my current employer the % is a little high. That being said, CSCO and QCOM have been on my watch list for a while, and I would not mind adding both.
    – Gremlin

  8. Don’t know much about IT stocks. But the yield is awesome and Cisco has been around for many years thus is a mature company! I may look towards a tech ETF in the future

    • SMM –

      Thanks for the post. Yep – they have a great balance sheet, earning and brand power, as well as seem to be making the right moves in the industry to keep them around for longer. Looking forward to owning them!

      -Lanny

  9. Nice buy. I’m big on CSCO. I was one of the first of us to buy it 2-years ago. I’m happy to see its popularity rise among the community.

    • IH –

      Big popularity! The stock hit $31 now, and it’s about a percent or almost two percent below this purchase, dammit, may have to get more if they hit closer to $30 and for sure if they crack it. You?

      -Lanny

  10. Dude, I’m excited about your purchase!

    It’s funny because I’ve also been looking at Cisco. Well, by looking a friend recommended I look into and your post here was a great starting look. I’m glad other dividend investors are interested. This may be my next stock purchase. =)

    Thanks for the review!
    -Andrew

    • Wallet –

      Nice! It’s been a hot stock purchase as of late, and damn – yesterday it was at a flat $31 essentially, great price point. Keep an eye on the price movement and hope that you are still able to grab on a discount. Talk soon wallet!

      -Lanny

  11. I have a friend who is a network engineer….Cisco is the best but expensive. There are competitors out there trying to steal market share with lower prices (not sure on quality though). I would buy them if they had a few more years of dividend growth.
    Later,
    DFG

    • DFG –

      Very nice, and I hope that you do buy them, then, as that will mean that they’ve had more years of divvy growth : ) I was hoping for some more “red” today in the market to scoop more up! Looking forward to future trading days to add more to the position.

      -Lanny

  12. Well, you know what I think of this. CSCO was one of the 5 on my watchlist, and I like the company very much. However, SKT found it´s place as the nr 1 for me this time, but buying more CSCO soon. Great yield too!

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