designs, manufactures and sells internet protocol based networking equipment,
along with other products and services related to the communication and
information technology industry. They
describe themselves as the worldwide leader in IT that helps companies
"seize the opportunities of tomorrow by providing that amazing things that
happen when you connect the previously unconnected". CSCO is either the #1 or 2 supplier in most
of the main IP-related categories.
Key Financial Metrics
is a great growth company and very profitable to boot.
of the perceived higher risk of technology, it trades at a discount to the
market (forward-looking P/E of 10.2x?
Are you kidding me? This is
versus 14.8x for the S&P overall).
make no mistake, CSCO is a blue chip company.
I only give it 3 blue chips, in the context of our NITK criteria, due to
it only recently starting to pay dividends.
But look at the phenomenal dividend growth. The total return of capital to shareholders
is a respectable 47%.
growth engine has been a combination of building ($5.5 billion R&D budget
in 2012; ranked #1 or 2 in most market segments), buying (over 160 acquisitions
since inception in 1984) and partnering (nearly 70,000). They also own over 14,000 patents issued.
growth - they target the huge percentage of the world that still is not
connected (note: CSCO's marketing docs
indicate 99% of the world is still not connected. This clearly is not true, unless there is
some type of qualifier that I'm not aware of).
Their plans also calls for delivering the "Internet of
Everything", which digitizes the world, connecting people, process, data
and things. So whether it's 99% untapped
potential or less, the future growth prospect for CSCO is still robust.
will likely continue to increase dividends by an aggressive amount over the
coming years, making this company an excellent long term Higher-Growth Dividend
Other Pertinent Facts
of DRIP program: Fair (CSCO only gets a Fair ranking due to
setup costs and ongoing investment fee, dividend reinvestment fee and sales
an investor? yes, DRIP investor since
word of caution - CSCO has a minimum $500 one-time purchase or $50 for ongoing
investments. With a $2.50 ongoing
investment fee and a dividend reinvestment fee, the attractiveness of this DRIP
is probably dependent on the amount of monthly investment you plan. $2.50 on a $50 monthly investment is high, at
ranking out of ranking system of Poor, Fair, Good, Excellent.