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For the second time in the last six months, Intel (INTC) has increased its quarterly dividend. First it went from 15.75 cents to 18.12 cents per share. Now it’s going from 18.12 cents to 21 cents per share. (Just 18 months ago, Intel raised the dividend from 14 cents to 15.75 cents per share, so that’s a 50% increase in a year-and-a-half)

Going by yesterday’s closing price of $23.71, Intel now yields 3.42%. Jeff Reeves of Investorplace notes that Intel is now the fifth-highest yielding stock in the Dow.

Intel should easily make over $2.20 per share this year and next year, so the dividend is very safe. The company is also sitting on $12 billion in cash which is $2.20 per share.

I think shareholders ought to be pleased. I’m always leery when companies sit on too much cash. This is what Peter Lynch called “the Bladder Theory of Corporate Finance.” There’s nothing wrong with Intel rewarding its owners.

I also think we may being a shift in the way investors view common stocks. This could be the beginning of a period where investors place more emphasis on dividends rather than earnings growth.

In the 1990s, no one would have believed me if I told them that Intel would be looked upon as an income stock in the not-too-distant future.

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