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3 ‘Big Bang’ Income Stocks

Seeking steady dividends and increases for the long term

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  • Dividend Yield: 2.78%
  • P/E: 13

Cisco NASDAQ:CSCOI’m not the only fan of networking and communications giant Cisco (CSCO): Jeff Reeves recently penned a recommendation for the stock based on its most recent dividend increases, low payout ratio, and solid dividend yield.

I’m with him on all counts, and would add steady growth along the bottom line over the past three years despite a slowdown — but not lower — growth along the top line. Indeed, Cisco is making moves to try and boost that top line, most recently through the acquisition of security software provider Sourcefire (FIRE), along with its nearly $225 million in revenues. The company still owns around 60% of the data-networking market, and is an entrenched cloud player and as Tom Taulli writes, up and coming mobile force. In another words, these guys are well positioned for the future.

Cisco sits on around $50 billion in cash and short-term securities, and net operating cash flow of just under $13 billion, it has plenty of room to improve on its 33% payout ratio. Cisco started paying a dividend in 2011, and it’s making up for lost time: 183% dividend growth since the dividend inception, including a very healthy 21% boost on the last go-around. I would expect more of the same for a long time to come. Cisco pays out its dividends in January, April, July and October.

Marc Bastow is an assistant editor at As of this writing he did not hold a position in any of the aforementioned securities.

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