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 $1,250 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