Retirement Dividend Stocks: Cisco (CSCO)
- Market cap: $123 billion
- Current dividend yield: 2.9%
- Payout ratio: 34% of projected 2014 earnings
- Dividend growth: 216% in 4 years, from 6 cents per quarter in 2011 to 19 cents per quarter currently
But regardless of the short-term trends, the important thing to remember is that dividend investing involves holding for the long haul – and looking forward, Cisco is as safe and stable as they come.
Especially now that it just boosted its dividend … again.
We don’t have a long history of CSCO dividends, but the company has ramped up payments in a hurry since instituting its dividend in 2011 from 6 cents to the recently announced rate of 19 cents. Given recent sluggishness, there’s a lot of incentive to keep the pedal down and keep shareholders happy even if revenue remains challenged.
An important thing to remember with long-term dividend investing is that the current yield is not your yield down the road as payments increase.
There’s a lot of reasons to consider buying Cisco on recent softness. CSCO stock has a forward P/E of less than 11, so it’s pretty fairly valued compared with other big tech peers. And it is only paying out about one-third of its profits via dividends, meaning room for continued growth in distributions.
Even if Cisco doesn’t burn down the house with share price appreciation, this dividend stream is what matters most.