It’s frustrating to be a saver right now. The traditional avenues of saving, CDs and U.S. Treasury bonds, offer minuscule yields that are probably negative when adjusted for inflation. A quick check at Bankrate.com shows the best CD yields at 1%. U.S. Treasuries aren’t much better: 10-year bonds yield only 1.66%.
Numbers like this can be very discouraging to everyday folks looking to save and put money away. Thankfully, there are plenty of stable, well-known companies with clean balance sheets, which yield nice dividends over 3%. Many are yielding over 4%. This is just something you can’t get in the traditional savings market, and if you think about it, they really aren’t that much riskier. These companies can offer what bonds and CDs never will – the possibility of a growing dividend.
Today, I’m going to focus on three companies that I believe can be bought now. They are well known and their stock prices are still relatively low. All of them trade at reasonable earnings multiples. Finally, all three are well-managed and have clean balance sheets. I hope you will consider them and add them to you watch list.
Cisco Systems, Inc. (NASDAQ:CSCO)
Dividend Yield: 3.24%
Cisco Systems, Inc. (NASDAQ:CSCO) designs, manufactures, and sells internet protocol (IP)-based networking and other communications and IT products and associated services. Its specialty is products for transporting data, voice, and video within buildings, across campuses, and around the world.
Cisco Systems, Inc. (NASDAQ:CSCO) is part of the “old tech” group, rising stars in the late 1990s. Unlike many of the others, such as Microsoft Corporation (NASDAQ:MSFT), Dell Inc. (NASDAQ:DELL) and Intel Corporation (NASDAQ:INTC), Cisco Systems, Inc. (NASDAQ:CSCO) still remains both dominant and relevant today. In other words, Cisco Systems, Inc. (NASDAQ:CSCO)’s line of business is not one that is in decline.
The chart above shows that Cisco Systems, Inc. (NASDAQ:CSCO) really hasn’t done much in months and its valuation is reasonable. But, the most compelling thing about Cisco right now is the steady growth it offers for the patient investor.
Presentation can be found at Cisco Financial Analyst Conference 2012.
Last year was a pretty good year for Cisco, increasing its revenue by a solid 7%. In fact, the company expects this to be a long-term trend in both revenue and earnings per share. The company’s goal is compound revenue growth of 5%-7% and earnings per share growth of 7%-9% over the long term.