10 Best Telecom Stocks To Buy Right Now

02. Cisco Systems, Inc. (NASDAQ:CSCO)

Average Analyst Share Price Target Upside: 25.22%

Average Analyst Share Price Target: $56.47

Number two on our list of ten best telecom stocks to buy right now is Cisco Systems, Inc. (NASDAQ:CSCO). Cisco Systems, Inc. (NASDAQ:CSCO) forward dividend yield stands at 3.57%, with an annual payout of $1.60 per share. The company’s payout ratio is 39.25%, reflecting a solid balance between rewarding shareholders and retaining earnings. Over the past five years, the dividend growth rate has been 3.04%, and it has a strong track record of increasing its dividend for 12 consecutive years. In recent development, Cisco is poised to announce another round of layoffs, potentially affecting thousands, as it shifts focus to cybersecurity and AI. This second wave of cuts could match or exceed the 4,000 jobs lost in February. Cisco’s workforce, around 84,900 as of July 2023, does not yet include the February reductions. Cisco’s stock fell nearly 1% on August 9 after the news and has dropped over 10% this year. The company is diversifying its offerings, including a $28 billion acquisition of cybersecurity firm Splunk and significant investments in AI.

Analysts project an average target price of $56.47 for Cisco Systems, Inc. (NASDAQ:CSCO), suggesting a potential upside of 25.22%. This optimistic outlook reflects confidence in Cisco’s strategic shift toward high-growth areas like cybersecurity and AI, despite recent challenges and layoffs.

Oakmark Fund made the following comment about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2023 investor letter:

“Cisco Systems, Inc. (NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”