Trading212 Portfolio- 17/08/20

Weeks summary


Stock picked: Cisco Systems

Ticker: CSCO

Shares added: 0.1539

Total shares owned: 0.348

Dividend yield: 3.39%

Payout ratio: 53.79%

Dividends received:

£0.02


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This weeks stock

What does Cisco systems (CSCO) do?


Cisco systems designs, manufactures and sells networking and other products related to the communications and information technology industry providing solutions for connecting people computing devices and computer networks together.

Their products allow people to access or transfer information without concern of time difference, place or type of computing system.

They operate in America, Europe, the Middle East, Africa, Asia Pacific, Japan and China.

They provide infrastructure platforms as well as networking technologies such as switching, routing, wireless and data centre products.

This company also offers collaboration products comprising unified communications, Cisco TelePresence, and conferencing, as well as the Internet of things and analytic software.


Fundamentals:


Dividend Yield: 3.39%

Payout ratio: 53.79%

Profit margin: 22.75%

Return on assets: 9.15%

Return on equity: 28.61%

P/E ratio (price to earnings): 12.60

Adjusted EPS: 0.65

EPS (Earning per share) Growth: 1.15%

BETA: 0.94

Cash: $29.42B

Debt: $14.58B

EBITDA: $15.91B

Click here for CSCO Q3 report


Stock breakdown:


Looking over Ciscos fundamentals we can see that the stock has a nice dividend yield of 3.39% which I believe is in the sweet spot, especially when accompanied by a payout ratio of 53.79% which is still under the 60% which I normally like to see.


CSCO has a very healthy profit margin of 22.75% over double the 10% I like to see from a stock, they can certainly look after themselves. Currently the stock has a P/E ratio of 12.60 which I find quite an attractive entry point, to me CSCO with P/E shows its about fair value.

Recently Cisco Systems dropped around 11% which resulted in the P/E coming to this level. This was due to Cisco reporting a decline in revenue for the fourth quarter, a soft earnings outlook and that the Chief Financial Officer Kelly Kramer is retiring. [1]


Currently CSCO has a BETA of 0.94 which shows its fairly volatile stock, especially with that recent drop in share price.


What I do find very attractive is the amount of cash compared to debt which is extremely healthy. With this cash they are returning value to shareholders through their dividend and share buyback program. They have spent $981 million in share buybacks in the third quarter alone, with $2.7 billion over the first 9 months.


In the third quarter of 2020 Cisco closed the acquisition of Exablaze. [2]


Cisco Systems has a tough time ahead of them but I believe they are still heading in the right direction. They do have some strong fundamentals but has recently had a string of bad news for the company. That being said I see the dividend is still strong and they are pushing ahead with their share buy back. With 5G coming along it will be interesting to watch how much CSCO will benefit.


Disclosure: I am long Cisco Systems (CSCO)


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Dividends received


This week we received 2 dividend this week totalling £0.02


MA @ £0.01

AAPL @ £0.01


Total dividend (6 month): £2.40

Amount for charity (6 month): £0.60

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General account summary

As of typing this the challenge portfolio is only down £2.58 (-0.64%). Out of our 5 pies in the portfolio only the consumer staples are in the positive. INTC and CSCO are weighing down the Tech pie but the Real Estate pie being the biggest looser which is down 1.84%. Though this portfolio is down overall, we have created a nice dividend stream which is starting to pay off. Coming into the second half of the year we should be able to beat last half donation to charity.


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What is:

P/E ratio EPS Payout ratio BETA Dividend

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[1] CSCO drops 11% due to reported decline in revenue.

https://www.marketwatch.com/story/cisco-stock-faces-worst-day-in-nearly-a-decade-as-analysts-say-cost-cuts-signal-coronavirus-as-long-term-overhang-2020-08-13

[2] CSCO acquisition of Exablaze

https://www.cisco.com/c/en/us/about/corporate-strategy-office/acquisitions/exablaze.html



 

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