Tags: Cisco | Dobosz | dividend | yield

Forbes’ Dobosz: Cisco Systems Is a Dividend Darling

By    |   Thursday, 11 Apr 2013 11:51 AM

Cisco Systems is trading at discounts to its historical multiples of sales and earnings and at a discount to the overall market, while paying a dividend that is “quite meaningful,” according John Dobosz, editor of Forbes Dividend Investor newsletter.

Last month, the company, which was founded in 1984 and produces switches and other components for Internet protocol communications, raised its quarterly payout to 17 cents per share from 15 cents, producing a yield of 3.3 percent. The outlook offers reasons for optimism, Dobosz wrote in an article for Forbes.

Since March 2011, when Cisco’s dividend was initiated at a quarterly amount of 6 cents, the company has nearly tripled the payout, with it more than doubling from last year’s 8 cents.

Editor's Note:
Economist Warns: 50% Unemployment, 100% Inflation Possible

Dobosz asserted that earnings provide the basis for more increases in dividends. The payout ratio is 34 percent of expected earnings per share. However, free cash flow per share was $1.55 during the past 12 months, and cash totaled $46.4 billion, or $8.70 per share.

Sales are expected to rise 5.7 percent to $48.7 billion for the year ending July 30, with earnings forecast to increase 7.6 percent to $1.99 per share.

Dobosz, however, offered a note of caution: insider selling. Robert Lloyd, president of development and sales at Cisco, recently filed a trading plan that allows him to sell as many as 879,100 shares through options that expire in the June to September 2014 period, and to sell up to 198,300 shares upon the vesting of stock awards.

“Planned selling may not be the same as dumping a stock en masse, but it requires some vigilance on the part of investors,” he wrote.

U.S. companies during the first quarter paid an additional $14.5 billion in dividends on common stock while firms boosted payouts, according to S&P Dow Jones Indices.

In the first quarter, companies reported 944 dividend increases, an increase of 39 percent from 677 a year earlier.

In comparison, 139 firms cut dividends, up from 35 a year earlier.

"Dividends continued to increase in the first quarter with actual cash payments increasing 12 percent and the forward indicated dividend rate reaching a new all-time high," Howard Silverblatt, senior index analyst at S&P Dow Jones indices, told Dow Jones Business News, adding that this year will probably surpass the record dividend payments of 2012.

Payout rates held at 36 percent, Silverblatt said, lower than the historical average of 52 percent.

The percentage of non-S&P 500 U.S. issuers paying a dividend increased in the first quarter to 46 percent from 42 percent in the first quarter of 2012. For the large-cap S&P 500, the proportion of companies paying a dividend reached 81 percent, a high not seen since November 1999.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
InvestingAnalysis
Cisco Systems is trading at discounts to its historical multiples of sales and earnings and at a discount to the overall market, while paying a dividend that is “quite meaningful,” according John Dobosz, editor of Forbes Dividend Investor newsletter.
Cisco,Dobosz,dividend,yield
469
2013-51-11
Thursday, 11 Apr 2013 11:51 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved