Intel Corporation (INTC), Caterpillar Inc. (CAT): Scared By Dow (.DJI) 15K? Check These Out.

Intel Corporation (NASDAQ:INTC)As the Dow Jones Industrial Average (Dow Jones Indices:.DJI) crosses 15,000 points for the first time ever, a level considered unimaginable only a few short years ago, investors may be understandably concerned. It seems like it was just yesterday that the United States was embroiled in the worst financial crisis since the Great Depression and the Dow cratered below 7,000.

Fast forward to today, and the tape tells a different story. The country’s banks are lending again, businesses and consumers are more confident, and corporate profits are healthy. To that end, the Dow has surged more than 14% so far this year alone.

If you’re nervous about committing money to the Dow Jones Industrial Average (Dow Jones Indices:.DJI) at these levels, you likely aren’t the only one. Many retail investors remain on the sidelines. However, there are members of the Dow that are trading more cheaply than the broader market, and provide compelling dividend yields that give even nervous investors a sizable margin of safety.

Consider these Dow components

Like a few of its large-cap technology peers that are reliant on the personal computer, Intel Corporation (NASDAQ:INTC) hasn’t been able to escape criticisms that its business is akin to buggy-whip technology. The semiconductor giant lost one-third of its value during a difficult period last year, in which its operating results over that time period left a lot to be desired.

Indeed, Intel Corporation (NASDAQ:INTC)’s full-year results were poor. For the full-year, revenues and earnings per share dropped 1.2% and 11%, respectively. The company’s troubles extended into the first quarter of 2013, which saw revenue and diluted EPS fall 2.5% and 25%, respectively. However, these results weren’t as bad as the market feared.

Another Dow member in the middle of a difficult period is heavy machinery maker Caterpillar Inc. (NYSE:CAT), one of the world’s largest providers of earth-moving equipment, seemed to be doing everything right when it reported full-year 2012 results. The company reported record revenue and earnings per share for fiscal 2012 of $66 billion and $8.48 per share, respectively. Revenue increased 10% year over year, and EPS climbed 15% as compared to the prior year.

Unfortunately, there were hidden warning signs in Caterpillar Inc. (NYSE:CAT)’s report, and the news since has been less than flattering. In its full-year 2012 report, management provided a 2013 outlook that likely left investors disappointed. This year, Caterpillar Inc. (NYSE:CAT) expects revenue to come in between $60 billion to $68 billion and earnings between $7 per share and $9 per share—meaning the midpoint of each range represents a year-over-year decline.

Despite their operating struggles as a result of economic slowdowns in the markets and business lines they depend on, both Intel and Caterpillar Inc. (NYSE:CAT) have shown signs of life in recent weeks. Intel is up 25% since its recent low of $19.36 reached last November. Meanwhile, Caterpillar Inc. (NYSE:CAT) has rallied more than 11% just since mid-April. The market is seemingly becoming more confident in the fact that both of these companies are in sound financial positions and should dig themselves out of their respective problems.

In addition, these companies maintain big dividend yields. Intel pays a hefty dividend yield near 4%, and Caterpillar pays nearly 2.5% to its investors. These dividend payouts compare favorably to the 2% yield that investors would get by buying the S&P 500 Index. In addition, both stocks trade for approximately 12 times their trailing earnings per share, a measurable discount to where the S&P trades, at about 18 times the index’s earnings.

Be brave and Foolish

If you’re nervous about the next downturn, nobody could blame you. The markets can be extremely volatile and there are always geopolitical risks that can derail the global economic recovery.

However, there remain cheap stocks within the Dow Jones Industrial Average that carry reasonable valuations and compelling dividend yields. You can achieve multiple layers of downside protection, as these companies haven’t rallied to the extent of the broader market, pay dividend yields in excess of the yield available on the S&P 500, and have lots of cash on their balance sheets. Brave investors with a desire for capital gain potential and steady dividend income should consider these stocks.

The article Scared by Dow 15,000? Consider These Stocks originally appeared on and is written by Robert Ciura.

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