Having some brains while investing is important, but do they have to be human brains? Computers, cell phones, and many other electronics have brains too. In them, they are often called a CPU (central processing unit).
The best of breed in CPU’S is Intel (INTC). When buying a computer for a long time, your choices was an Intel (INTC) or Advanced Micro Devices (AMD) CPU. Advanced Micro Devices (AMD) is a $2 billion company and Intel (INTC) is a $141 billion company. “Well, if I know anything about which number is bigger than the other number, I’d say that” (Hermes, Futurama) Intel (INTC) is bigger. Advanced Micro Devices (AMD) does not pay a dividend and Intel (INTC) pays a 3.5%. This makes the comparison pretty easy for a dividend portfolio, Intel (INTC) wins.
Now there are other competitors out there. With our rule of only investing in businesses headquartered in the USA, this eliminates a lot of other choices. Eliminating a lot of other companies, we are left with Intel (INTC). While it is true that Intel (INTC) has missed a lot of the cell phone business, there are a lot more areas to compete. They are still winning in computers, helping them be a cash cow. And there is a lot more opportunity for future growth. Cars are getting more electronics all the time and we will eventually have self-driving cars. With the term “Internet of Things,” this will be another growth area. Internet of things refers to idea that more and more items will connect to the internet. Such as controls for your house, toys, machinery, appliances, video games, communications, and many more to come.
Now a few of their competitors do have different advantages and do a better job than Intel (INTC) in certain categories. If we put them side by side, Intel (INTC) has the best chips in CPU’S. And they have a massive R&D (research and development) budget and lots of profits to keep competing where they want to compete. Being best in breed does not mean being the best of everything. It means being the best in what you do. Making $11 billion a year is a good way to show you are the best.
So we bought 10 shares of Intel (INTC) for $307.60 with our commission. Starting out, they are going to pay us $10.40 a year, with increasing dividends in the future. Since 2002, they have been paying the same or increasing dividends every year without missing a beat. We like our odds.