It’s one of the most lucrative dividend payers on the market.

Dividends per share have increased 110% in the past five years… up 50% in just the past two.

#-ad_banner-#And the company has raised its dividend twice in the past year alone.

That’s to speak nothing of the massive amounts of stock the company is buying back — $10 billion so far this year, with $14 billion more authorized. And it just announced record revenue and earnings for the third quarter.

But I’m betting you haven’t even looked at this stock if you’re a traditional income investor…

That’s because right now, Intel (Nasdaq: INTC) only pays a yield of 3.4%.

Most income investors probably see this yield and don’t look twice. But if you’re only looking at companies that pay yields of 6% or more, I think you’re making a big mistake.

You see, some of the most reliable and lucrative dividend-paying companies don’t always offer the biggest yields. That’s because more goes into a stock’s total return than just the “headline” yield.

Let’s take a closer look at Intel. It’s the world’s largest semiconductor chip maker. It owns 80% of a $30 billion market, according to investment research firm Morningstar.

Intel’s business throws off enormous amounts of cash, and the management team is doing everything it can to put a fair share of this money in shareholders’ pockets.

Since 2006, Intel has increased its payment 16% annually.

If this pace continues — and right now there is little reason to think it won’t — just five years from now Intel is probably going to be paying $0.44 per share every quarter, giving today’s investors a future yield of 7.3% based on today’s purchase price.

But that’s not all…

During 2011 alone, Intel has bought back 468 million shares worth $10 billion. Management has another $14 billion allocated to future buybacks. At recent prices, this adds up to more than 10% of all shares outstanding. And with a smaller share base, dividends per share should be boosted even more.

Meanwhile, thanks to growth in computers in emerging markets and the rise of Internet-enabled devices in developed markets, Intel is seeing strong and consistent demand for its chips. Just a few weeks ago, the company announced quarterly revenue and net income hit a new record — both jumping double-digits from a year earlier.

The truth is, when you start digging you can see Intel fits all the criteria you should want to see in a stock that can earn solid returns in the long term:
 It enjoys huge (and lasting) advantages over the competition.

 It buys back massive amounts of its own stock.

And it pays investors each and every year by dishing out growing dividends.

Now, I’ve been tracking Intel for some time now. I own it personally, and based on its long-term prospects, I included it as one of my “10 Best Stocks to Hold Forever.”

I also added the stock to my $100,000 real-money Top 10 Stocks Portfolio near the start of September. And in less than two months, the price has already gained 25%.

Action to Take –> It’s proof that when it comes to income stocks, making big and lasting returns is not only about locking-in outsized yields. Sometimes you have to dig a little deeper to see how much potential a “low-yielding” stock like Intel actually holds.

[Note: Intel is just one of my “10 Best Stocks to Hold Forever.” Many of the companies on this exclusive list fit the three criteria I’ve listed above. Once you find stocks like these, the strategy is simple — just buy their shares and hold them “Forever.” To see my “10 Best Stocks to Hold Forever” research — including several names and ticker symbols — just click here.]