Cisco (CSCO)

[Dividendsrule]

(02-05-2016, 07:34 PM)Caversham Wrote: This is a great company with great financials. It has a very solid 3.6% yield currently, and I think it will approach 4% with the expected April increase.

The current cash on the balance sheet exceeds all liabilities, so it's likely there will be more IoT related acquisitions in the near future.  I think Jasper is a solid acquisition and I think CSCO payed a fair price.

A couple of downsides/risks:
* The demand for their products has been weak over the last couple of quarters, but this is also true for most other companies.
* Their reliance on acquisitions instead of internal R&D to generate growth.
* A short dividend track record (initiated in 2011).  However, since 2011, growth has been fantastic and management has stated they plan to return a minimum of 50% of FCF to shareholders through dividends and share buybacks.

I think it is undervalued right now.  My conservative fair value is around $29-$30.   I opened a position a couple of weeks ago and plan to add more in the coming weeks.

EDIT: Another small, but nice bonus...  The dividend is paid in January, April, July, October.  I don't receive many dividends from other companies during these months, so CSCO helps even out the monthly cash flows a little bit.

Thanks for the feedback, I initiated a small position Friday and I like what I'm seeing with the company.