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2 Brilliant Blue-Chip Dividend Stocks You Can Buy Today

By Anders Bylund - Apr 12, 2013 at 2:03PM

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The Dow is stacked to the ceiling with terrific dividend stocks. Here are two of the best income opportunities on the blue-chip index today.

The Dow Jones Industrial Average (^DJI -0.32%) is not just a collection of 30 market-defining blue chips. It's also packed with brilliant dividend stocks.

All 30 of the current components pay a dividend today, ranging from Bank of America' modest 0.3% yield (with a bullet, now that regulators have finally given the bank the option to raise payouts again) to AT&T and its massive 4.7% yield backed by monthly payments from more than 100 million wireless customers.

The average Dow stock sports a 2.6% dividend yield and has increased payouts by 8.7% annually over the last decade. As a testament to the Dow's dividend strength, that long-term growth includes the banking industry's blanket cuts after the 2008 meltdown. For another perspective on the Dow's dividend powers, consider that about half of the 2,800 stocks in the Russell 3000 index index don't pay dividends at all. The average yield on that wider market barometer is also 2.6%, but payouts grow at a far slower 6% annual rate.

So which of these 30 potential income machines can you buy today? The recent slump in the tech sector has slapped huge value tags on two of the Dow's Silicon Valley residents.

The widely covered death of the PC has caused investors to treat Intel (INTC 0.59%) like toxic sludge. Share prices have fallen 24% over the last year while the Dow advanced 14.2% overall, pushing Intel's dividend yield into the stratosphere. The chip giant has never before been the brilliant dividend stock that it is right now.

INTC PE Ratio TTM Chart

INTC P/E Ratio TTM data by YCharts.

This dividend is so tasty, I had to buy some for myself. I locked in an effective 4.4% yield in early December 2012, and you can still nab a 4.2% yield today.

Cisco Systems (CSCO -13.22%) hasn't suffered along with Intel in the PC panic, because the company works far closer to enterprise-class computing needs. But share price gains haven't kept up with recent earnings improvements, and while the dividend policy may be young, it has already been boosted three times.

CSCO PE Ratio TTM Chart

CSCO P/E Ratio TTM data by YCharts.

This adds up to a generous 3.2% yield right now, with every indication that Cisco plans to take the payouts even higher.

The Dow is an embarrassment of riches. Intel and Cisco are the two best combinations of deep value and excellent dividend stocks I can find there today.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$31,388.43 (-0.32%) $-74.11
Intel Corporation Stock Quote
Intel Corporation
$42.60 (0.59%) $0.25
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
$41.97 (-13.22%) $-6.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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