Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Intel Corporation (INTC), AT&T Inc. (T): Should Long-Term Investors Go for Dividends or Blue-Chip Bonds?

Page 1 of 2

Given the recent boost in bond yields, let’s compare dividend yields to bond yields for the 30 companies in the Dow Jones Industrial Average . For each of the 30 stocks, I found notes with about 10 years to maturity and compared the bond yield to the dividend yield. Thirteen Dow stocks have a dividend yield higher than the yield on their own mid-term notes. The table below lists the company in each of five sectors with the biggest spread between the company’s stock yield and its bond yield.



Dividend Yield

Bond Yield

Bond Price

Bond Matures


AT&T Inc. (NYSE:T)

Telecommunication services




Feb. 15, 2022


Intel Corporation (NASDAQ:INTC)

Information technology




Oct. 1, 2021


E I Du Pont De Nemours And Co (NYSE:DD)





April 1, 2021


McDonald’s Corporation (NYSE:MCD)

Consumer discretionary




Jan. 15, 2022


Johnson & Johnson (NYSE:JNJ)





Nov. 15, 2023



The stocks
AT&T Inc. (NYSE:T) boasts the largest spread between the dividend yield and bond yield. It’s also the highest-yielding company in the Dow Jones Industrial Average. A concern with AT&T is whether the highly competitive wireless business can grow fast enough to offset the shrinking landline business. So far, AT&T Inc. (NYSE:T) has been able to maintain its string of annual dividend hikes. My Foolish colleague Anders Bylund explains why the dividend is in better shape than it looks at first glance.

Intel Corporation (NASDAQ:INTC)

Intel Corporation (NASDAQ:INTC) dominates the PC chip market but is working to catch up in mobile. The stock’s price-to-earnings ratio is below the S&P 500 average, there’s nearly $4 billion of net cash on the balance sheet, and the payout ratio is a reasonable 44%. All point to a company with the ability to maintain and raise its dividend.

Chemical giant E I Du Pont De Nemours And Co (NYSE:DD) trades at a discount to market valuation and has a reasonable P/E ratio. Recent dividend history has been steady and includes a four-year stretch with no increases. Concerns include recent guidance for earnings to be at the low end of previously provided guidance.

A growing business, a decent dividend, and a solid history of dividend hikes dating back to 1976 are some of the reasons to consider McDonald’s Corporation (NYSE:MCD) for an income-oriented portfolio. Breakfast and new menu items drove an increase in comparable-store sales for May; if that continues, McDonald’s will be positioned to keep the string of annual dividend hikes coming.

Johnson & Johnson (NYSE:JNJ) is one of only four non-financial companies in the U.S. to sport a top “AAA” credit rating from Standard and Poor’s. J&J’s $6 billion in net cash, reasonable 66% payout ratio, and long track record of annual dividend hikes are all good reasons to earn the company a place on any income investor’s research list.

And the bonds
All five bonds carry credit ratings comfortably in the investment-grade range, meaning there’s almost no chance investors won’t collect the coupon payments and return of principal promised. The main risk in these five bonds is rising interest rates. As rates go up, bond prices go down. It’s true that bond investors don’t have to sell at a discount, but if rates are rising, they would have to choose between selling and moving to something else or sitting on a poorly performing investment.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!