Cisco (CSCO) dips on seventh straight quarterly sales decline >>> READ MORE

5 Cheap Tech Stocks to Buy Now

Cheap tech stocks are hard to find, so snatch up these five now

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Cheap Tech Stocks: Cisco

tech-stocks-CSCO-stockP/E: 11.0 based on FY2014 earnings
Dividend Yield: 3.1%
Dividend Payout Ratio: 34% of FY2014 earnings

Another underperforming enterprise tech play to consider is Cisco (CSCO). It may not have the reach of IBM, but performed a bit better in 2013 — 10% gains vs. a negative return for IBM — and boasts a slightly higher dividend.

Right now, research firm Gartner is predicting a 3.1% growth rate for total IT spending worldwide — up from a basically flat 0.4% growth rate in 2013 and a modest 1.2% growth rate in 2012. Enterprise software and data center spending are among the stronger segments for 2014 — so even if PCs are fading, software sales are not.

Furthermore, as we saw with auto sales, you can only delay purchases so long before pent-up demand spills over to boost tech stocks like CSCO again. If consumers were wooed back to auto showrooms thanks to affordable vehicles sporting back-up cameras and amazing media capabilities, it’s reasonable to think that businesses will eventually be wooed back to enterprise technology as the increased speed and functionality of newer software makes the investment a no-brainer.

And once again, I’ll point out that this cyclical potential comes tapered with significant dividends to hedge your bets. Tech stocks Hewlett-Packard, IBM and Cisco all boast between 2% and 3% in dividend yield. And all boast payouts between 20% and 35% of 2014 profits, meaning dividends are sustainable and ripe for future increases.

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