When people talk about AI stocks, the big names like NVIDIA, Microsoft, and Meta usually dominate the conversation. But for income-focused investors, there’s one company that quietly combines AI growth potential with steady dividends: Cisco Systems (CSCO).

Cisco is one of those bluer-than-blue chips that has been a backbone of the internet for decades. Now it’s carving out its place in the AI revolution. Let’s break down why Cisco may be the one AI stock income investors really need to consider.

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Cisco’s Role in the AI Boom ⚡

Cisco is critical to global networking. Its products sit at the heart of enterprise systems, data centers, and web-level infrastructure. AI applications rely on massive networks to move data quickly and securely, and Cisco’s gear is essential in making that happen.

Beyond networking, Cisco also has strong businesses in cybersecurity, observability, and collaboration tools. These aren’t just side hustles — they’re healthy growth areas that complement its AI-driven networking core.

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A Strong Quarter with Room to Run 🚀

In its fiscal Q4, Cisco grew revenue by 7.6% to $14.67 billion, just ahead of expectations. The real story is where the growth came from:

• Networking (AI backbone): +12%
• Security: +9%
• Observability: +4%
• Collaboration: +2%

Geographically, the Americas led with 9% growth, followed by 7% in APJC and 4% in EMEA.

The company also widened margins, with adjusted EPS up 14% year-over-year — nearly double the pace of revenue growth. That’s a big sign of operational strength.

And while guidance already looked bullish, many analysts believe Cisco is being cautious. Orders for AI infrastructure are more than doubling expectations, which could set the stage for even stronger results.

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Dividends and Buybacks for the Trader Family 💰

For those of us focused on income and long-term growth, Cisco checks both boxes.

• Dividend yield: 2.44%, with 13 straight years of increases.
• Annual payout: $1.64 per share.
• Payout ratio: A safe 62.6%, leaving plenty of room for future raises.

On top of that, Cisco continues to buy back shares aggressively, with $14.2 billion still authorized. This not only supports the stock price but also boosts earnings per share for remaining investors.

The balance sheet is rock-solid too, with long-term debt at just 0.5x equity. That’s what we’d call a fortress position.

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Analyst Trends Look Bullish 📊

Wall Street is warming up to Cisco. Coverage is rising, the consensus rating is Moderate Buy with a bullish tilt, and price targets keep trending upward.

The current average target sits around $74.53, just under all-time highs. But the high-end estimates suggest Cisco could break into fresh record territory by year-end, possibly even eclipsing its old DotCom highs.

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Final Thoughts for the Trader Family 🌟

Cisco may not be the flashiest AI stock, but it might be the most reliable one for income investors. With strong fundamentals, steady dividends, a fortress balance sheet, and growing exposure to AI infrastructure, Cisco has the rare mix of growth + income stability that’s hard to find.

For those of us building portfolios with the future in mind, Cisco deserves a serious spot on the watchlist.