Thursday, October 20, 2011

Intel, Just a Dividend Off The Old Block

So my friend John called me up today and he asked me, " What's a good dividend stock to invest in, you know I was thinking maybe investing in Pepsi (PEP)? ". I told him Pepsi is good and that I own some shares, but then it dawned on me that there may be a better stock that was in a growing industry and also paid a BETTER dividend than even the great Pepsico---and what was that stock? Well, didn't you guys read my post heading? (just kidding!)--Intel (INTC) is the stock that I am talking about. Let's dive a little deeper shall we?

Intel is a semiconductor company that produces microprocessor chips that are in computers, tablets, and smart phones. It is the largest semiconductor company in the world with almost $50 billion in sales every year. The funny thing is that many people do not realize that Intel pays a dividend with a yield of over 3.5% a year, I mean this is a better yield than Pepsi (3.3%) and way better than a 10 year treasury note (2.2%). The good news doesn't stop there though, Intel has been paying a dividend since 1995, but since 2001 it has started to increase the rate of its dividend. In 2001, the company paid an annual dividend of 8 cents, but in 2011 Intel now pays 84 cents! Intel's dividend growth rate for the last five years has been over 14% per year (in a recession, let's not forget). How has the stock performed since its first dividend in 1995? Well according to Chuck Carnevale, the creator of F.A.S.T Graphs , Intel's annualized return including dividends since 1995 is over 11%. I would not turn my back on returns like that and John, I hope you won't either. I am long INTC.

Disclaimer: All articles are written as an opinion of the writer or writers. The contributors on this website are not professional investment advisors. These articles are written to share investing ideas that may be of interest to the reader. Always seek the advice of a professional invesment advisor before investing.

1 comment:

  1. Hey I agree with you, Intel is one of the first stocks I ever bought, and was one of the stocks we both told Kristi to invest in 20 years ago. Hopefully she still has it and should take us both out to dinner soon! I just feel that Pepsi has more room for growth and Intel has a lot of competition in the smart phone chip market.