Lanny’s Recent Stock Purchase – Cisco (CSCO)

I am typing in a secure place at the moment and it could very well be thanks to Cisco (CSCO), which is the stock I purchased on Tuesday, June 13th.  I am ready to just go for it and keep buying stock fundamentally sound, dividend paying & increasing, globally recognized companies.  I am on that pursuit train to financial freedom and one doesn’t get there by sitting on the sidelines, but lacing up and getting into the game.  On Tuesday, I purchased stock into Cisco.

The Stock – Cisco (csco)

As we all know – big Cisco (CSCO) was on my June watch list for the month and believe me, I wasted no time in this purchase.  I even analyzed the company back in March this year, when they were trading at $34.23 (and this was pre-dividend increase!) – which the stock dropped 8% to the time of my purchase, hence the purchase.  Why did I buy them now?  Well, let’s consider some of the metrics from the Dividend Diplomats Stock screener to go through a skinny here:

1.) Price to Earnings (P/E) – CSCO was trading at $31.525 when I purchased them on forward expected earnings of $2.38, equates to a P/E of 13.25 – 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 of my analysis WAY back in March, their yield was 3.39%.  At the time/date of purchase, the yield ballooned (haha), to 3.67% – heck yes!  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 a 90 basis point difference there – showing that they are in territory that they haven’t been in a LONG time on the dividend yield front.  This also matches up with 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 pudding, here is a screen shot of my purchase:

I purchased $,250 worth at $31.525 per share for a total of 39.5258 shares, with a $3.95 trading fee.  This added $45.85 to my forward dividend income.  It felt nice being back in the capital deployment business to buy undervalued assets and that’s what I have concluded I did here.  With their history, culture and mission of bringing tomorrow’s future today – I believe Cisco will be able to be the leader in I T & network security for time to come.  Looking forward to dividends as well!

Cisco (csco) stock purchase summary & conclusion

This is a NEW addition to my portfolio within the technology/security industry and will be now be producing a new forward income in total of $11.46 per quarter going forward.  This 7th purchase this year is pushing me towards the dividend goal within my goals set for 2017.

How do you feel about this stock purchase of Cisco?  Did you think it was the best of the 3 on my previous watch list?  On a different note – did anyone make purchases on the announcement of Amazon (AMZN)?  Huge grab on Whole Foods, which really shook the market up quite a bit.  Appreciate the posts, feedback and comments everyone, I am sure I am now a “fellow” shareholder of Cisco to many of you!  Good luck and happy investing, as always!

-Lanny

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37 thoughts on “Lanny’s Recent Stock Purchase – Cisco (CSCO)

  1. I think your assessment of CISCo is almost accurate. However, I am waiting for a real correction to Market, to jump in. Especially, on Tax Reform. Trump might not be able aggressively to reduce taxes, as planned, which Market will react. Over all, Market is looking for excuses to do a correction. Again, no one can time the Market!

    • Mike Z –

      Thanks for the comment, I’ll have to jump in if there’s a big correction as well. Can’t time it, so I bought because it hit my metrics and hopefully – a stock will hit yours MZ!

      -Lanny

  2. Nice pickup here Lanny! I purchased a very small position in Cisco when it was trading at $26 last year and have been keeping an eye on it. Currently, I am trying to max my Roth as I will be working in the US for some time to come as I got my visa so REITs are looking great. Bought some KIM, sadly the day before Amazon. Right now I think many REITs offer some great bargains.

    • Stef –

      Interesting my man! And wish we could swap out our positions for CSCO.. I like your $26 price point better, haha. I want more O, that’s for sure, and would love to see them squeak back into the mid to low 50’s. LETS GO!!!

      -Lanny

  3. I’m still w/o any tech names in my portfolio but have actually started to look into the space recently with a watch on QCOM and now CSCO after your purchase. The numbers do make it look very attractive especially with that juicy yield that appears to be quite safe with room for growth. It might be time for me to dip my toes in tech. I’ll be watching. I just watched the grocers get slammed after the AMZN announcement. Some names did look attractive after that knee jerk reaction though. I still have not made any buys in June but I know I’ll buy something in the next one or two weeks. Always be deploying fresh capital every single month. Nice pick up!

    • DH –

      The knee jerk reaction was quite impressive on Friday, just may have made a game time purchase during that time frame too (which a post will come out about).

      I think Cisco isn’t a bad name or QCOM, given their longevity, their ability to adopt and forward think – dipping toes is probably the best approach. Keep it up DH, killing it over there.

      -Lanny

  4. I also bought CSCO based on your earlier article. Really appreciate all the work you guys put into this site.

    Do you have an opinion on Kroger stock? The numbers look very tempting, but is it a value trap?

    • DivDude –

      Appreciate the comment and to be a fellow shareholder now!

      Love Kroeger and… may have picked some up on Friday at $21… hehe. So I think they will be around and their financials are solid with great dividend and earning metrics.

      -Lanny

  5. Cisco is a great long term purchase, I don’t think you’ll regret it.
    Regarding the Amazon announcement, I guess every dip like this in companies likethat TGT create aa good buying opportunity. The market is pricing an apocalyptic scenario right now inI my view….

    • Roadrunner –

      Hilarious – love the apocalyptic reference, by the way. The reactions are priceless and we need to stand on guard to find right undervalued companies, that’s for sure.

      -Lanny

  6. I have followed CSCO since the late 90s. It’s had quite the run over the years as the darling of Wall Street to falling out of favor. I think they are a solid company like you said but I think Arista is coming after them hard and will further erode CSCO over time. Will definitely be interested to see what happens.

    • MSM –

      Thanks for the comment, as always. Arista has had quite the run – hoping you are wrong as it relates to CSCO selfishly : ) haha, who knows maybe CSCO can acquire them? Uh oh!!

      -Lanny

  7. Nicr buy. CSCO is on my list as well together with INTC that I already own. Regsrding AMZ aquidition, sadlly bought TGT bit earlier, shoul have waited. Sam with T. Wheb I buy it something happens and then is gets cheaper after month or so. Only exeptipn JNJ, my first us stock that bow is in green 🙂

    • P2035 –

      Thank you for the comment. I do own INTC as well, nice to see another one out there! That’s fine – set rules for yourself based on your own stance – I typically do a 5% correction to re-up into the company if nothing fundamentally had changed – just a reaction to an event of some sort. Should define one for yourself!

      -Lanny

  8. Great purchase Lanny, I doubled down my position of the company recently as well. I originally purchased in the low-20s so for me it’s always hard for me mentally to average up a stock cost basis, but I think they are best in class with their hardware and what they sell will be around for at least our lifetimes. hopefully the large increases they’ve been handing out can continue.

    • DStacs –

      I did the same thing with Pfizer earlier this year – buying it at more than 2x when I initially purchased them over 6-7 years ago. It was hard, but the metrics couldn’t be neglected.

      They are best in class from presentations on their investor page I have reviewed and speaking to a few of their employees about how satisfied they are with their service. Looking forward to being a shareholder for many years to come.

      -Lanny

  9. Very nice purchase! Makes me want to look at CSCO more closely!

    What do you think of that TGT drop? Opportunity to press of the buy button again ??!!

    All the best.

    • Simon –

      Thank you, def. take a look at their metrics and let me know what you think.

      As for TGT – retail has had some shake up and TGT is transforming their stores quite a bit – stay tuned on their 2nd and 3rd quarter earnings release and read the investor call transcripts to gain more knowledge on how things are going and the direction ahead. I still think people love target and going on their “target runs” – so I am holding but not adding.

      -Lanny

  10. I think you made a great purchase. I’m looking to add 5 more stocks to my portfolio and CISCO is definitely a possibility. Thanks for the write up. It helps me make my decision as to which stocks to include.

  11. Lanny,
    Cisco has been on my watchlist for a while. I probably will not pull the trigger on it, as I have more than enough in the tech / telecom field, so its time to grow my accounts elsewhere. However, I like the move – I think they are primed for solid growth and information technology is only becoming more ubiquitous by the day.
    -Gremlin

  12. I loved CSCO when it was under $25 in early 2016 and bought some then. I sold it this year because I would like to see more growth from a tech company. Now I’m thinking of just buying the T. Rowe Price Global Technology Fund, because I would like to have a larger tech weighting and don’t think I have the knowledge or time to keep up with all the changes in the industry.

    • Brian –

      That’s not a bad move on what makes you feel comfortable with what you want to have your hands in! Stick with your strategy and if it makes sense, then it’ll hopefully make sense down the road as well.

      -Lanny

  13. What do you think about buying a consumer staples index fund like FSTA or VDC? The whole sector took a dive when Amazon announced it was buying Whole Foods. These funds offer about 2.5% yield and the expense fees are almost nothing (.08/.10 respectively). Consumer Staples as a whole has some of the best returns if you look long term. This would also help mitigate the risk of owning an individual stock. Just curious on your thoughts.

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