CSCO's current annual dividend is 56 cents. A purchase price at $19 a share (yes, still possible) would bring a dividend yield to price of nearly 3%, which represents an even more modest payout ratio of 23%. Again, the advantage of buying the "cash-flow kings" is there's continually plenty of money for dividend hikes, accretive acquisitions, stock buybacks and product expansions.
In fact, on Monday CSCO announced "... the expansion of its Linksys Smart Wi-Fi portfolio with three new 802.11ac powered Smart Wi-Fi Routers, a new compact 802.11ac USB adapter, new features and new Smart Wi-Fi Apps. Together, these innovations give consumers a smarter way to control their wireless home network and connected devices.
"With the new Smart Wi-Fi Routers, consumers will enjoy incredibly fast Wi-Fi speeds with exceptional in-house Wi-Fi coverage" according to the company's
timely press release
"Consumers will also notice simplified installation that can be completed in a matter of minutes. Additionally, the routers offer new tools for home network monitoring and control, and new mobile apps for anytime, anywhere remote access of files, photos, videos, music and more. The new Smart Wi-Fi Routers and compact USB adapter are expected to be available in the spring."
Product updates and improvements are a big part of CSCO's game plan to increase earnings and capture more market share. "Cash-flow kings" are usually ahead of the competition and always looking for better ways to serve the customers and please the shareholders.
This year began with prudent investor resolutions like not losing money and buying quality companies when the share price is considered oversold and undervalued. This includes focusing on the ones that are excellent at generating lots of cash and are very efficient in the utilization of that cash.
WFC and CSCO are two examples that fit this description, so the next step is waiting for both to become oversold and undervalued. An old proverb says, "Exceptional patience produces immediate results." The awareness of what to invest in AND what price to pay can be those immediate results. Tally ho!
At the time of publication the author had a position in WFC.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.