Investors in Cisco Systems (CSCO 0.56%) waited a long time. The one-time darling of the tech industry briefly achieved the world's largest market cap in 2000. But since the dot-com bust, it struggled. Growth rates slowed, and the market's zeal for tech equipment providers faded.

Cisco's stock price peaked at $82 per share 23 years ago, and today trades about one-third below that all-time high. But with growth reigniting, should investors bet on the company returning to its former glory, or stay on the sidelines? 

Cisco's growth

Since the dot-com bust, the company tried many ways to draw investors back into the stock. In 2011, after years of opposing such a move, it introduced a dividend. Management boosted the payout every year since its debut, and at an annual rate of $1.56 per share, its dividend yield is now around 2.8%, nearly double the S&P 500's current average yield of 1.6%.

Additionally, Cisco generated around $19 billion in free cash flow in its fiscal 2023, which ended July 29. It paid about $6.3 billion in dividends during that period, so it can clearly afford to maintain its streak of payout hikes.

Cisco has also tried to diversify away from its core networking equipment business. To that end, it built a cybersecurity business. It has also gone into the online meetings space, though its Webex platform has only gained a modest percentage of the market amid competition with Zoom.

But for all of its efforts in the services arena, its product segment still accounted for $43 billion of its $57 billion in revenue in fiscal 2023, about 76% of the total. Moreover, overall revenue increased by 10% from fiscal 2022, and product revenue made up nearly all of that increase.

Such a recovery may be helping Cisco stock. It has risen by 29% over the last 12 months, well ahead of the S&P 500. And though its price-to-earnings ratio of 18 is not a record low, some investors may find that valuation attractive amid the recent increases.

Cisco's challenges

Nonetheless, other financials indicate that its ongoing struggles are far from over. Operating expenses surged 13% higher during the fiscal year, while net income rose only 7% to $13 billion, indicating that slow growth is still very much an issue.

Worse, the company forecasts revenue in the range of $57 billion to $58.2 billion for fiscal 2024. At the midpoint, that would amount to revenue growth of just 1%.

For GAAP (generally accepted accounting principles) income, Cisco forecasts $3.26 per share at the midpoint, which would be an increase of 6%. That would continue Cisco's long track record of modest net income growth, giving investors few reasons to believe that conditions for the company have changed.

Should I buy Cisco stock?

Considering its recent financials and its outlook, Cisco is likely not on a path toward sustained, rapid growth in revenue and earnings. This does not mean it is in trouble. Cisco likely can maintain a modest growth rate, and it holds the potential for significant improvement as a dividend stock.

However, conditions as they stand suggest a further 29% rise in the stock price is unlikely in the near term -- it could take many more years before it returns to its record high. Unless investors want a sustainable source of rising dividend income, they are unlikely to connect well with this tech stock.