Sep 19, 2015

Recent Buy - CSCO

So, this week investors were holding breath waiting for that Fed rate decision. I was afraid that keeping rates would lead to a huge rally on the markets. Well, luckily that didn't happen. So far Mr. Market's respond looks more like a decline. It's easier to make purchase decisions in this kind of environment. I had a few bucks on my brokerage account which I used to buy Cisco Systems Inc (CSCO).

Buy in USD - Cisco Systems Inc (CSCO)
Trade Price: 25.95
Shares: 3
Commission: 0.34
Total: 78.19
Sector: Technology - Networking & Communication Devices
Yield: 3,3%
Payout Ratio: 46%
Dividend Increase Streak Years: 5
DGR 3-yr: 60,2%
P/E trailing 12-month: 14,9

I have some telecoms in my portfolio, but I consider Cisco to be my only pure tech play. I have been searching for new tech names every now and then, but it's a tough sector to invest in. Anyways, I'm pleased to have invested in CSCO. Valuation and yield seems compelling enough. Also this company is known for its strong cash flow. I believe in demand for devices and services in Networking & Communication. But is Cisco able to keep up with the progress in technology? In my opinion that's the biggest risk with tech companies.

Since initiating dividend in 2011, it has been growing at a whopping rate as you can see above. What can be expected in the near future then? I guess most recent increase of 10,5% gives a better idea of that. This purchase adds $0.63 to my October dividends. I hope for another good month in October, but frankly speaking case Baxter spin-off is going to hurt a little bit. This was a small addition to my position in CSCO, and I'm looking for additional purchases sooner or later.

My portfolio has been updated to reflect this trade.

Disclosure: Long CSCO
  
 

6 comments:

  1. Nice purchase. I work in the industry with one of Cisco's competitors - and know that Cisco sure is a great company. It has done well over the years, even though they went thru a rough patch a few years ago.

    Best
    R2R

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    1. Hey R2R, it's great to hear from someone inside the industry that Cisco is not a bad company. But working with a competitor, I guess you don't wish too rosy future for CSCO, Hah!:)
      Thanks for the visit and comment!

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    2. Hah...we are a very small upstart who cannot compete with CSCO across teh board...but we have a niche where we are beating them. CSCO realizes that it is a higher margin business and sees it as a lucrative option - so they are moving into the space - not exactly as us, but something very closeby related. But the breadth of products, patents and innovation that CSCO has done over the years is unbeatable. A lot of the standard technology that is used to run the internet these days comes from CSCO labs. So, we all need to be thankful for their contribution to the industry :)

      Best wishes
      R2R

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    3. Ok, thanks. Very interesting information here.
      BR,
      DL

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  2. I like the purchase. CSCO is a leader in the router space. They are also pushing hard with the IoT which is basically connecting the Internet to everything. I am not familiar with Chuck - the new boss, but Chambers was known for his "get it done" attitude. In my previous life (like R2R), we always wanted to beat Cisco, but when never could. I think this leadership tradition will continue despite the pressures from the cheaper chinese companies.
    From a dividends perspective, the >3% yield and good growth potential make it an attractive DGI option in the tech space.
    D4s

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    Replies
    1. Hi D4S,
      this is really fascinating, to get views from some business insiders. I like my purchase even more now:)
      Thanks for dropping by!

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