Want some extra cash in your pocket each year, with low risks and no effort? If you're looking to generate $1,000 in dividend income, investing in Cisco Systems (CSCO -0.62%) could be a solid option.
Crunching the numbers
To find out how much you need to invest, divide your target income by the yield. With a yield of 3.4%, you'll earn $1000 a year from a $29,687.50 Cisco investment. At today's price of $47.50 per share, this translates to 625 shares.
You can double-check my math by flipping the equation around to run the numbers backwards. Those 625 Cisco shares currently earn $0.40 per quarter, so let's multiply the payout by four dividend payments, and then by 625 shares. The result is exactly $1,000.
For the final step here, multiply 625 shares by the actual stock price, and you'll stick the landing at $29,687.50. The exact investment will vary as Cisco's share price moves, but the required share count will stay the same.
Is Cisco a good income investment?
The dividend data paints Cisco as a robust income investment. The company has a long history of paying dividends and increasing them regularly, stretching back to a quarterly payout of $0.06 per share in 2011.
The dividend boosts have been smaller in recent years, but the data security and networking veteran's board of directors still insists on a small annual increase. That includes this era of unpredictable economic swings, leading to unstable cash flows for Cisco.
As a result, Cisco's annual dividend yield has averaged 3% over the last 10 years and 3.1% in five years. Look up "stable dividend yields" in a dictionary, and you might just find a Cisco logo on that page.
Overall, Cisco's stable dividend payouts and consistent growth make it an attractive option for income-seeking investors. And you can start earning $1,000 a year in dividend payments by investing less than $30,000 in Cisco Systems.
