Share price of Cisco Systems (NASDAQ:CSCO) has gone up by 22% over the past 12 months, outperforming a 13% return for S&P 500 for the same period. Despite the stellar performance, the stock remains a buy from dividend investing perspective. In this article, I will elaborate on my cash flow and dividend forecast analyses that are supportive of the view.
Based on my dividend growth forecast, at $26 per share, dividend yield on cost will reach 4.0% by early 2017, representing a 1% growth in dividend yield in less than 2.5 years (see chart below). In light of Cisco's strong dividend growth prospect that is not fully appreciated by the current valuation, the stock remains a buy for long-term income investors at the current price.
Source: Seeking Alpha
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