Cisco's (NASDAQ:CSCO) share price recently experienced a 5% pullback from its 52-week high. From a dividend investing perspective, I believe the hiccup presents a great buying opportunity for long-term income investors as the stock now trades at a solid discount to its fair value. In this article, I will elaborate on some cash flow and dividend analyses to support my buy thesis.
Over the long run, the consensus view calls for a 7% long-term EPS growth. The implication here is that the earnings payout will continue to rise if dividend growth remains at above the long-term EPS growth potential. In summary, Cisco's current share valuation offers a fair margin of safety due to its discount to the intrinsic value from a dividend investing perspective. Given the current dividend yield of 3.1% and my estimated value gap of about 10%, a buy rating is warranted.
Source: Seeking Alpha
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