The Dow Jones Industrial Average (^DJI -0.11%) 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 0.64%) 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 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 0.06%) 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 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.
