This week, in an effort to be as boring as possible, I picked up small positions in two technology dinosaurs who are likely to pay growing dividends — Cisco (CSCO) and Intel (INTC).
Both companies face strong competition and some specific challenges — most prominently Intel with their challenges in building an effective mobile chip business (Atom) against competition from, among others, Arm Holdings (ARMH). But both are the standard bearers for their core businesses (desktop and server processors for Intel, networking routers and switches for Cisco), and both are dirt cheap, cash-rich, and paying dividends. I’m not going to tell you anything about these two companies that you don’t already know, and they certainly do face competition and possible loss of market share, but it’s hard to go wrong with buying a cash-rich, dominant company in a growing industry at less than ten times earnings. If you’re interested in a breakdown of their businesses, I’ve been impressed by the work done by Trefis on this kind of analysis lately — you can see their overview of Intel here, and Cisco here.