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4 Reasons Cisco Is A Great Long-Term Dividend Growth Stock, At The Right Price

Summary 

•   Cisco Systems has been in a multi-year turn round that has caused its share price to under perform for years.

• However, in the past year the efforts have been bearing fruit and shares have soared 37%.
• The company's long-term growth strategy is a good one, and is likely to generate solid dividend growth and market beating returns over the coming decade.
• But there remain some serious risks for investors to consider.

• And with shares trading at pretty much fair value, I can't recommend investors invest new capital in Cisco over superior undervalued tech opportunities right now 

The core of my dividend growth investment strategy is to buy industry leading companies, with strong growth prospects and good track records of payout growth in all economic and industry conditions. However, I'm also a value investor who is always concerned with buying shares with a sufficient margin of safety in proportion to a company's risk profile..

 

 

CSCO Total Return Price data by YCharts

For years Cisco Systems (CSCO) has struggled with top line and bottom line growth, as its core business model faced disruption from more nimble rivals. This caused Cisco's returns to badly under perform the broader market as well as most tech stocks between 2010 and 2016.

However, over the past few years the company's new strategy of bundling its core hardware businesses with integrated software subscriptions has started to bear fruit. As a result Cisco's performance over the past two years has been far more impressive.