Intel's Dividend and Stance Distance It From Cisco (INTC, CSCO)

Intel Corporation (NASDAQ: INTC) is showing that it deserved the recent upgrades from Wall Street analysts because it is not sharing the woes of Cisco Systems Inc. (NASDAQ: CSCO).   The company has two announcements this morning.  First, this is set to be the company’s best year ever.  Second, and more importantly for dividend investors, Intel is raising its quarterly dividend.

The company’s board of directors has approved a 15% payout hike in the quarterly cash dividend starting in Q1-2011.  The new dividend is $0.18 per share per quarter, generating $0.72 in annual payments or generating an implied yield of about 3.4% based upon Thursday’s $21.21 closing price.

As far as Intel’s best year ever… The word from CEO Paul Otellini is, “Intel remains on track to have our best year ever and we continue to generate strong cash flows.  Our ongoing operational performance and confidence in our business going forward provide the ability to return more cash to shareholders.”

Intel has raised its dividend steadily and it is now paying out a very large amount of its earnings.  When Intel hiked its payout last year, the quarterly payout went from $0.14 to $0.158 per share per quarter.

That $0.72 annualized payout compares to Thomson Reuters estimates of $1.99 EPS for 2010 and $1.94 EPS for 2011.  Paying out 35% of income is very high compared to most technology stocks.

Cisco Systems was recently named as one of the Top Ten Stocks for the Next Decade.

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JON C. OGG