Cisco Systems Among 3 Dividend Plays To Reflect On

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Includes: BK, CSCO, NVS
by: Tactical Investor

Only stocks that met the following criteria were included in this list. Novice investors would be wise to focus on the following criteria instead of obsessing on the yield factor only. High yields are generally not associated with safe long-term investors, and unusually high yield are usually a sign that all is not well with the company.

  1. Net income should be trending upwards for the past three years
  2. Cash flow per share should be rising for the past three years
  3. EPS has to be trending upwards for the past three years
  4. Sales should be trending upwards for the past 3 year
  5. In general the payout ratio should be below 100%
  6. A yield of 4.5% or higher or an a 3-5 year projected EPS growth rate of at least 7%
  7. Interest coverage of at least 15 or a retention rate of 70% or higher
  8. If the company has a positive levered free cash flow, it should be viewed as "icing on the cake"
  9. A current ratio above 3.00 should also be viewed as an additional plus.

Company: Cisco Systems (NASDAQ:CSCO)

Basic overview

  1. Levered free cash flow = $9.48 billion
  2. Operating margins = 22.6%
  3. Profit margin = 16%
  4. Beta = 1.46
  5. Short ratio= 1.50
  6. Operating cash flow = $11.23 Billion
  7. Quarterly revenue growth = 6.6%
  8. Quarterly earnings growth = 19.8%

Growth

  1. Net Income ($mil) 12/2011 = 6490
  2. Net Income ($mil) 12/2010 = 7767
  3. Net Income ($mil) 12/2009 = 6134
  4. EBITDA ($mil) 12/2011 = 10939
  5. EBITDA ($mil) 12/2010 = 12068
  6. EBITDA ($mil) 12/2009 = 9807
  7. Cash Flow ($/share) 12/2011 = 1.87
  8. Cash Flow ($/share) 12/2010 = 1.79
  9. Cash Flow ($/share) 12/2009 = 1.49
  10. Sales ($mil) 12/2011 = 43218
  11. Sales ($mil) 12/2010 = 40040
  12. Sales ($mil) 12/2009 = 36117
  13. Annual EPS before NRI 12/2007 = 1.25
  14. Annual EPS before NRI 12/2008 = 1.43
  15. Annual EPS before NRI 12/2009 = 1.17
  16. Annual EPS before NRI 12/2010 = 1.4
  17. Annual EPS before NRI 12/2011 = 1.4

Dividend history

  1. Dividend Yield = 1.9
  2. Dividend Yield 5 Year Average = 0.3

Dividend sustainability

  1. Payout Ratio = 0.19
  2. Payout Ratio 5 Year Average = 0.03

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 8
  2. 5 Year History EPS Growth = 2.37
  3. ROE 5 Year Average = 21.53
  4. Return on Investment = 12.96
  5. Debt/Total Cap 5 Year Average = 20.45
  6. Current Ratio = 3.6
  7. Current Ratio 5 Year Average = 2.93
  8. Quick Ratio = 3.30
  9. Cash Ratio = 2.92
  10. Interest Coverage = 16.5
  11. Retention rate = 81%

Novartis AG Common Stock (NVS

Basic overview

  1. Levered free cash flow = $11.85 billion
  2. Operating margins = 20.9%
  3. Profit margin = 14%
  4. Beta = 0.54
  5. Short ratio= 2.10
  6. Operating cash flow = $14.9 Billion
  7. Quarterly revenue growth = -2.20%

Growth

  1. Net income 2008 = $8233 million
  2. Net Income 2009 = $8400 million
  3. Net Income 2010 = $9794 million
  4. Net Income 2011 = $9113 million
  5. EBITDA 12/2011 = $11524 million
  6. EBITDA 12/2010 = $12394 million
  7. EBITDA 12/2009 = $10473 million
  8. Cash Flow 12/2011 = 5.52 $/share
  9. Cash Flow 12/2010 = 5.25 $/share
  10. Cash Flow 12/2009 = 3.72 $/share
  11. Annual EPS before NRI 12/2011 = 5.57
  12. Annual EPS before NRI 12/2010 = 5.13
  13. Annual EPS before NRI 12/2009 = 3.7
  14. Annual EPS before NRI 12/2008 = 3.59
  15. Annual EPS before NRI 12/2007 = 2.81

Performance

  1. ROE = 13.62%
  2. Return on Assets = 10.81%
  3. Quarterly Earnings Growth = -16.8%
  4. Quarterly Revenue Growth = -2.2%
  1. Current Ratio = 0.9
  2. Current Ratio 5 Year Average = 1.41
  3. Quick Ratio = 0.60
  4. Cash Ratio = 0.34
  5. Interest Coverage = 15.00

Dividend sustainability and history

  1. Payout Ratio = 0.70
  2. Payout Ratio 5 Year average = 0.34
  3. Dividend yield 5 year average = 2.9%
  4. Current yield= 4.6%
  5. Dividend growth rate 5 year average = 18.9%
  6. Consecutive dividend increases = 5 years
  7. Paying dividends since = 1992
  8. Total return last 3 years = 48%

Company: Bank of New York Mellon (NYSE:BK)

Basic overview

  1. Operating margins = 281.7%
  2. Profit margin = 17%
  3. Beta = 1.15
  4. Short ratio= 1.8
  5. Operating cash flow = $1.9 Billion
  6. Quarterly revenue growth = -0.1%
  7. Quarterly earnings growth = -1.00%
  8. Relative Strength 52 weeks = 40
  9. Cash Flow 5 -year Average = 3.02

Growth

  1. Net Income ($mil) 12/2011 = 2516
  2. Net Income ($mil) 12/2010 = 2518
  3. Net Income ($mil) 12/2009 = -1084
  4. EBITDA ($mil) 12/2011 = 4756
  5. EBITDA ($mil) 12/2010 = 4737
  6. EBITDA ($mil) 12/2009 = -1076
  7. Cash Flow ($/share) 12/2011 = 2.75
  8. Cash Flow ($/share) 12/2010 = 2.85
  9. Cash Flow ($/share) 12/2009 = 2.72
  10. Sales ($mil) 12/2011 = 14730
  11. Sales ($mil) 12/2010 = 13875
  12. Sales ($mil) 12/2009 = 13648
  13. Annual EPS before NRI 12/2007 = 2.62
  14. Annual EPS before NRI 12/2008 = 3.24
  15. Annual EPS before NRI 12/2009 = 2.18
  16. Annual EPS before NRI 12/2010 = 2.37
  17. Annual EPS before NRI 12/2011 = 2.09

Dividend history

  1. Dividend Yield = 2.5
  2. Dividend Yield 5 Year Average = 2.10
  3. Dividend 5 year Growth 12/2011 = - 15.6%

Dividend sustainability

  1. Payout Ratio = 0.25
  2. Payout Ratio 5 Year Average = 0.25

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 9.75
  2. ROE 5 Year Average = 10.96
  3. Return on Investment = 4.65
  4. Debt/Total Cap 5 Year Average = 39.15
  5. Current Ratio = 0.74
  6. Current Ratio 5 Year Average = 0.77
  7. Quick Ratio = 0.74
  8. Cash Ratio = 0.57
  9. Interest Coverage Quarterly = 6.50
  10. Retention rate = 75%

Conclusion

In general, a great way to get into a stock at a price of your choosing is to sell puts at strikes you would not mind owning the stock at. Investors looking for other ideas might find this article to be of interest Exxon Mobil Our Favorite Of 3 Dividend Plays

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com.