This week, I'm looking for the third technology sector representative of six for my Ivy portfolio.
That technology sector has nineteen industries ranging from communication equipment, computers, consumer electronics, and contract manufacturing, to health, information technology and services, to internet, scientific instruments, software, solar, and all such techno-marvels.
Today I'm reviewing the large cap communication equipment firm named Cisco Systems Inc., ticker symbol CSCO. Cisco is the world's largest hardware and software supplier within the networking solutions sector. The company was founded in 1984 and is headquartered in San Jose, California.
The infrastructure platforms group includes hardware and software products for switching, routing, data center, and wireless applications. Its applications portfolio contains collaboration, analytics, and Internet of Things products.
The security segment contains Cisco's firewall and software-defined security products. Services are Cisco's technical support and advanced services offerings.
The company’s wide array of hardware is complemented with solutions for software-defined networking, analytics, and intent-based networking. In collaboration with Cisco's initiative on growing software and services, its revenue model is focused on increasing subscriptions and recurring sales.
The company serves businesses of various sizes, public institutions, governments, and service providers. It sells its products directly, as well as through channel partners, such as systems integrators, service providers, other resellers, and distributors.
I use three key data points to gauge the value of any dividend equity like Cisco Systems:
(1) Price
(2) Dividends
(3) Returns
Besides those three, several other keys will finally unlock an equity or fund in which to invest. Those first three primary keys, however, best tell whether a company has made, is making, and will make money.
CSCO Price
Cisco's price per share closed at $51.43 yesterday. A year ago its price was $44.52. Price rose $6.91 per share last year, or over 15.5%.
Assuming Cisco's stock trades in the range of $40 to $55 this year, Cisco's recent $51.43 price could rise by $2.57 and go to $54.00 by early March 2020.
CSCO Dividends
Cisco's most recent Quarterly dividend was $0.35 declared February 13th and payable April 24th. That $0.35 quarterly dividend equates to a $1.40 annual payout and a yield of 2.72% at yesterday's $51.43 closing price.
Gains For CSCO?
Adding the $1.40 annual estimated dividend to my $2.57 Cisco estimated price upside shows a $3.97 potential gross annual gain, per share, which will be reduced by costs to trade those shares.
Say we put a little under $1,000.00 today at the $51.43 recent CSCO stock price. A $10 broker fee paid half at purchase and half at sale costs $0.53 per share.
Subtract that $0.53 brokerage cost from the estimated $3.97 gross annual gain leaves a net gain of $3.44 X 19 shares
= $65.36 or nearly 6.6% net gain on a $977.17 investment.
Therefore, CSCO now shows a possible net gain of 6.6% including a 2.72% dividend yield.
Twenty-nine brokers cover this stock: Fifteen say "buy" CSCO. Five say CSCO will "outperform" peers. Nine say "hold" your CSCO shares.
Therefore, you can look at Cisco and see it has made money, is making money, and could throw a net gain of 6.6% including a 2.72% dividend yield. It could be more, it could be less.
The above speculation is based on past year performance. The actual results remain to be seen to determine if CSCO is worth your time and money.
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