Three Blue Chip Stocks Offering Safe Dividends

In the current economic environment, with Treasury rates at historic lows, fixed income investors are hard pressed to find decent yields. Savings accounts are yielding rates of less than 1% and even 3-year CD’s are only offering 2% returns. Income investors seeking respectable yields are forced to turn to dividend stocks, but the concern remains over how exactly how safe those dividends are. Jim Cramer recently discussed three blue chip stocks that offer investors a safe dividend.

General Mills

General Mills (GIS: 39.85 -0.20%) has become a household name for its popular consumer food brands. Earlier this month, the company increased its quarterly dividend by 4% to $.49. With this dividend increase, the company now offers investors a current dividend yield of 2.8%. Cramer stated that this dividend increase is an “incredible sign of strength” and believes that General Mills dividend is “as safe as they come.”

“We thank shareholders for their investment in General Mills,” says Chairman and Chief Executive Officer Ken Powell. “Our company strongly believes in returning cash to shareholders through dividends, and increasing those dividends as our business grows. Over the past five fiscal years, General Mills shareholder dividends have grown at a 9 percent compound rate. Our leading food brands are performing well despite the challenging economic environment, and today’s announcement reflects this fundamental business strength.”

Pfizer

Pfizer (PFE: 21.20 +0.43%) has been out of favor for some time with investors. Even with the strong stock market rally this year, the stock has only gained 5% compared to the 19% gain in the Dow Jones index. However, Jim Cramer has become more bullish on Pfizer since its Wyeth acquisition. This mega-deal is expected to save Pfizer $4 billion and greatly expands its portfolio.

On December 14^th, Pfizer announced that it was increasing its quarterly dividend by 12.5% to $.18 per share. The dividend hike increased the company’s current yield to 3.8%.

“The board has determined that a measured dividend increase can be supported at this time,” said Jeffrey Kindler, Pfizer Chairman and Chief Executive Officer. “This increase is a testament to our commitment to enhance shareholder value and our confidence in our business and our ability to rapidly integrate Wyeth and realize the anticipated benefits of the acquisition. While the dividend level remains a decision of the board and will continue to be evaluated in the context of future business performance, we currently believe that we can support future annual dividend increases, barring significant unforeseen events.”

AT&T

AT&T (T: 29.95 +0.54%) is currently the highest yielding stock in the Dow Jones index. It also happens to be Cramer’s favorite dividend stock. AT&T offers income investors generous 6.1% dividend yield. In 2009, the stock has traded similar to a bond. The company recently increased their quarterly dividend by 2.4% and with earnings expected to increase in 2010, AT&T’s high dividend yield appears to be very safe.

“Our 26th consecutive annual dividend increase underscores the Board’s continued commitment to stockholders and confidence in our strong financial position,” said Randall Stephenson, AT&T chairman and chief executive officer.