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Intel, Just a Dividend Off The Old Block

|Includes: INTC, PepsiCo Inc. (PEP)

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 (NYSE: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 (NASDAQ: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 http://www.fastgraphs.com/ , 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.