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Buy-and-Hold’s New-Age Fab Five

Five companies with staying power, dividend growth potential

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Intel started paying dividends in 1992, with a current quarterly payout of 21 cents per … oops! INTC just upped its payout again Monday, so make that 22.5 cents per share for the third quarter, which comes out to a 3.2% yield. Can the dividend increase? It seems like a silly question given that Intel’s latest boost is its third in a year-and-a-half. But the answer is yes — if a 27% ROE and a $13 billion war chest is any indication.

It’s also worth noting that InvestorPlace Editor Jeff Reeves recently gave Intel the nod as the one pick he would make for his children’s future.


No, Microsoft (NASDAQ:MSFT) did not invent the software industry; it just standardized it … then ran with it to the point where it was sued based on its product’s monopoly on the software industry … then survived to fight not just another day, but perhaps a lifetime.

Founded in 1975 by Bill Gates and Paul Allen, Microsoft’s Windows operating system is as famous — or infamous — as any product marketed around the world. In fact, Windows still makes a large part of the world go around.

The good news is Microsoft continues to innovate the platform to adjust to a changing world. Some would say that’s all it can do, and won’t find success anywhere else. A 38% ROE should give Microsoft the time to find out.

In the meantime, enjoy a dividend that has grown from 24 cents per share in 2003 to today’s current 80-cent payout that has MSFT yielding 2.5%. You also can find comfort in Microsoft’s $21 billion in free cash flow and $58 billion stashed away that should sustain payout increases for years to come — regardless of whether you decide to buy an Xbox 2030.


Is there more of a contrast in style and substance than Oracle (NASDAQ:ORCL) founder and CEO Larry Ellison and Warren Buffett? Probably not. But they share at least two common denominators: success and business acumen.

Ellison founded the company in 1977 with a focus on relational database information solutions, and in 1978 the Oracle Relational Database Manager Program was developed. Oracle went public in 1986, and the company ranks as the world’s largest database management software company that also cranks out a 24% ROE.

Oracle is a relative newcomer to a dividend, having fired one up in 2009, and it now stands at 24 cents per share for a dividend yield of 0.8%. But hey, you have to start somewhere.

Controversy might follow Ellison, but he sails the seas knowing $11 billion in free cash flow and $30 billion in the bank should be enough to keep dividend investors sated long after he retires to the sea for good.

Marc Bastow is an Assistant Editor at As of this writing, he was long AAPL, INTC, JNJ and MSFT.

Article printed from InvestorPlace Media,

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