Dow Dividend Stocks #9: Cisco (CSCO)
Cisco Systems (CSCO) has trickled down the ranks among our top Dow dividend stocks, as it now carries a yield of just slightly more than 3%.
CSCO performed fairly well in 2013, gaining about 12% on the year, but has been virtually flat since the start of January. The stock enjoyed a brief run-up mid-month after Barron’s claimed the shares could see a 20% return over the course of 2014, only to be sold off back down to the low $22 level.
The stock underperformed the rest of the tech sector during the bull market of 2013, and is still relatively cheap — with a forward P/E ratio of just 10.5 — compared to competitors Intel (INTC) and Microsoft (MSFT).
CSCO stock is undervalued, which may be reason enough to initiate a position, but on top of that, a trailing payout ratio of 36% indicates that there is still plenty of room for the company to increase its distribution in the future.