Cisco: A Safe, Cheap, Big Tech Stock Yielding 3.6%

Cisco Systems was a social gogo in the turn of the century, when its market value rose after the half-billion dollars.

Today, Cisco (ticker: CSCO) is much less even a better investment with a dividend yield of 3.6% in good health, assessment and convincing stability.

Like other technology heavyweights, Cisco has matured a tumultuous first that many smaller and younger players better quarter. Cisco shares have gained 23% since hitting a 52-week low in February.
And today, there is less naysayer among analysts sales. JP Morgan, who has been bearish on the stock market over the past two years, along with Cisco to neutral from low weight.

Shares rose 1.3% to $ 27.92.

Certainly, the analyst Rod Hall is not pounding the table on the stock. the earnings growth of Cisco's tibia. And with a target price of $ 27.50, Hall sees no place to head over the next year, arguing that at 12 times earnings forward, the world's largest maker of networking equipment business in line with its historical average.

Still, Cisco is trading at a big discount to the overall market. And after announcing a dividend increase of 24% in February (the increase in payment quarterly cash of 26 cents per share), Cisco has one of the highest returns of any cap value stock dividend in the Standard & Poor's 500, according to Hall.

Therefore, investors are paid to maintain a stock that faces little downside risk through prudent financial forecasts.

The main business of Cisco switches and routers is used to help connect computers to each other and to the Internet. This was under the pressure of increased competition.

Cisco has experienced faster growth in new types of products, including hardware and software conference. And some bulls see upside in its cloud business. However, a Cisco server recession expressed concern about spending business customers.

Consequently, analysts polled by Thomson Reuters see earnings per share increase of more than 4% at the end of this year in July to $ 2.30 on revenue of $ 49 billion. It expects earnings to increase to $ 2.39 per share next year.

Cisco in February called Barron "one of the cheapest ways to have a stable business generating large amounts of cash."

Cheap is correct. Even after its recent rally, Cisco will seek a reduction of almost 30%, both in the field of technology and the broader S & P 500. However, the company generated cash flow totaling $ 8,700 million over the last nine months and has completed its most recent quarter in January with more than $ 60 billion in cash on its balance sheet.

In February, Cisco has expanded its share repurchase plan of $ 15 billion. The company, meanwhile, has continued a streak of medium-sized transactions, including $ 320 million to acquire last month Israeli designer Leaba semiconductor chips.

However, some analysts do not see the value. Analyst at Bank of America-Merrill Lynch Tal Liani downgraded to neutral from buy Cisco, citing concerns about growth.

However, Liani raised his price target to $ 30, implying a price increase of nearly 8%. And if you give a multiple of Cisco market - 16.5 times earnings forward - that puts the stock at $ 37.