Companies that have done a great job raising their dividends and are anticipated to do so in the future are a smart place to start when looking for dividend stocks to buy and hold forever.
Although a list of S&P 500 Dividend Aristocrats should presumably be the first place to look for such names, I expanded the search to include the S&P 1500. I would have had three times as many equities to pick from, increasing my chances of identifying unique dividend stocks that provide income and capital growth.
The typical S&P 1500 stock has a dividend yield of 1.8% from December 31, 1999, to December 31, 2018. The yields on every stock listed in this column are equal to or higher. All of the businesses also have sound balance sheets.
To make things even more interesting, I’ll select only the stocks of companies whose net debt is less than $5 billion.
Cisco Systems (NASDAQ:CSCO currently has a 3.4% dividend yield and net cash of $10.35 billion.
I included Cisco in my recent column called the “7 Tech Stocks to Buy With Superior Fundamentals.” Not only did Cisco deliver better-than-expected fiscal Q4 earnings recently, but it also provided optimistic guidance for fiscal 2023. As I said in my previous article, the company’s free cash flow (FCF yield is approximately 7.3%. I consider any stock with a FCF yield above 8% to be a value name.
CSCO has Remaining Performance Obligations of over $31 billion. That’s almost three-quarters of its revenue. In the meantime, I’m sure that Cisco will find plenty of new business.
Cisco continues to transform its business from hardware-focused to software subscriptions. The tech firm’s shares might not look like they’re delivering the goods in the near term. However, its FCF generation says otherwise.
