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