New Tools and Cisco Systems

New Tools

I have recently added two new tools that I use to help identify buying opportunities. The first is my Watchlist and the second is a 10×10 scoring chart developed by David Van Knapp. They are both listed on the main menu. Once you go to the page scroll down to the bottom to find details on how to use each tool. I hope you find them as useful as I do. The watchlist contains all of the best dividend growth stocks that I follow, including one new addition Cisco Systems (CSCO).

Cisco Systems added to Watchlist

Last week the tech giant Cisco increased its dividend 24% percent (from $0.21 quarterly to $0.26) which puts its current yield at 4.14% as of Friday’s $25.11 closing price. It’s 3 year dividend growth rate is 20%. Looking at the 10×10 scoring chart Cisco with it’s current initial yield (I’ll round it down to 4%), and if Cisco can average a 15% dividend growth rate you would have a 10% yield on cost in just over 5 years, which is remarkable.

However, for being such an established tech giant Morningstar gives Cisco a narrow (not wide) economic moat. Long-term they are facing pricing weakness as switches and routers are slowly becoming a commodity, just like what happened to personal computers and servers. That’s the problem with technology companies compared to consumer staples to be viable long-term, tech companies have to reinvent themselves. On the positive side Cisco has a huge war chest of cash and several key strategic initiatives where it plans to gradually increase its share of revenue derived from Services as it pushes further into software, cloud, and analytics. With only a 5-year history of consecutive dividend increases the jury is still out on whether Cisco can become a reliable source of inflation beating income into years of retirement. So for now I have added it my watchlist to well… “watch”. I don’t currently own Cisco, but if I do buy Cisco it would be a smaller position and I would keep a close eye on it.

As for the technology sector I have holdings in IBM, QCOM, and I recently purchased Texas Instruments (TXN) at $47.60 which is a nice boring company with a solid history of earnings and dividend increases.

Filed in: Dividend Geek Portfolio • Dividend Growth Investing • Website Tools