Does Cisco Systems Belong in a Dividend Stock Portfolio?

The Nasdaq Composite crossed 5,000 this year, reaching that threshold for the first time in 15 years. It’s been a long road, but investors in the index can finally put the dot-com boom and bust behind them. But not all of the high flyers from the late 1990s have regained their former glory. It’s hard to believe now, but Cisco Systems, Inc. (NASDAQ:CSCO) was one the most valuable company in the world. Today, it doesn’t rank in the top 50. And while Cisco stock has been rallying for the past four years, more than doubling since bottoming out in mid-2011, the price of CSCO still is 65% below its old bubble high.

Cisco Systems stopped exciting momentum investors a long time ago, and CSCO probably will never again be a growth dynamo. Its routers and switches have become commoditized products and face increasing pressure from cheaper software-based alternatives. But this slower-growing, more-mature Cisco stock is starting to get attention from a different corner of the market: Dividend hunters. Cisco’s competitive pressures will not be going away overnight, and Cisco will probably see continued margin erosion for the foreseeable future. I should emphasize again that this is not a high-growth company. But Cisco stock would make a nice addition to a diversified dividend stock portfolio.

Source: InvestorPlace

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