Chip giant Intel (Nasdaq: INTC) just pumped up its quarterly dividend by 15%, resulting in an annual payout of $0.72 per share and a dividend yield just over 3.4%. If you never thought of Intel as an income stock before, maybe it's time that you did.

The company has paid steadily increasing dividends every year since 1992, occasionally skipping an increase but never shrinking or stopping the payouts. At the current yield, Intel is more generous than 22 of the 60 recommendations on our Income Investor newsletter service's scorecard, and it's comparable to such stodgy businesses as cereal mastodon Kellogg (NYSE: K) and energy trader UGI (NYSE: UGI).

Higher dividends are a priority for Intel, and payouts remain one of the company's favorite uses for its torrential cash flows. Intel spends a lot of money on share buybacks, including $1.8 billion in 2009 alone, but the $3.1 billion spent on divided payments that year absolutely dwarfs the repurchase figures. That's a trend that's likely to continue.

Keep in mind that Intel works in an industry that's focused on growth, where the preferred use of cash is hoarding it in a low-interest cash account, which makes these shareholder-friendly uses of cash that much more impressive. Like fellow semiconductor giant Texas Instruments (NYSE: TXN), Intel spends a significant portion of its cash and profits on buybacks and dividends while also pursuing business growth by sinking another few billions per year into research and development.

Fans of chief Intel rival Advanced Micro Devices (NYSE: AMD) sometimes cry foul and note that at least some of Intel's massive profits come from a history of anticompetitive and otherwise unclean business practices. Well, Halliburton has a shady history, too, and Raytheon makes a living on the science of killing people. That doesn't stop investors from loving their dividends and buybacks. Even if you see Intel as a sin stock, I don't think there's anything wrong with making money from it. If it makes you sleep better at night, you could tell yourself that you're taking money out of Intel's dirty pockets, thus cleaning the cash itself.

Have you ever seen a stronger combination of growth and dividends? Share your finds in the comments section below.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. Intel is a Motley Fool Inside Value choice. Kellogg and UGI are Motley Fool Income Investor picks. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended buying calls on Intel. The Fool owns shares of Texas Instruments. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.