8 Days Left To Cash In On Cisco Systems Inc (NASDAQ:CSCO) Dividend, Should You Buy?
Have you been keeping an eye on Cisco Systems Inc’s (NASDAQ:CSCO) upcoming dividend of $0.29 per share payable on the 24 January 2018? Then you only have 8 days left before the stock starts trading ex-dividend on the 04 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Cisco Systems’s latest financial data to analyse its dividend characteristics. See our latest analysis for Cisco Systems
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
Is their annual yield among the top 25% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has the amount of dividend per share grown over the past?
Is is able to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Cisco Systems fare?
Cisco Systems has a payout ratio of 58.28%, which means that the dividend is covered by earnings. However, going forward, analysts expect CSCO’s payout to fall to 47.88% of its earnings, which leads to a dividend yield of around 3.30%. However, EPS should increase to $2.07, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Cisco Systems as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Cisco Systems has a yield of 3.01%, which is on the low-side for communications stocks.
What this means for you:
Are you a shareholder? Whilst there are few things you may like about Cisco Systems from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. It may be beneficial exploring other income stocks as alternatives to Cisco Systems or even look at high-growth stocks to complement your steady income stocks. I suggest continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking all the above into account, Cisco Systems is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Take a look at our latest free fundmental analysis to explore other aspects of Cisco Systems.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
