This Dividend Powerhouse Is Leading the Dow Higher

The Dow Jones Industrial Average is up after homebuilder confidence surged in June. As of 1:15 p.m. EDT the Dow is up 153 points, or 1.02%, to 15,224. The S&P 500 is up 0.96% to 1,642.

There were two U.S. economic releases today.

The National Association of Home Builders' Housing-Market Index measures homebuilder confidence. A level of more than 50 indicates that more builders see conditions as positive rather than negative, and in June homebuilder confidence rose past 50 for the first time since April 2006!

NAHB/Wells Fargo US Housing Market Index data by YCharts.

Homebuilder confidence hit a low of eight in January 2009, recovered to about 20, and then began steadily rising in late 2011. During the downturn, many builders stopped building homes altogether. With little new supply of homes and many homeowners reluctant to sell due to being underwater on their mortgages, inventory of homes for sale is low. As such, NAHB chairman Rick Judson commented, "With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes." New-home construction is positive for the economy, as it employs a significant number of people and spurs on many other industries.

Today's Dow leader
Today's Dow leader is Cisco , up 3.2% to $24.85 -- a new 52 week high. Cisco announced today that it has opened an innovation center in Israel in collaboration with Pelephone Communications focused on mobile-networking services. Cisco expects worldwide mobile data-consumption to increase 13-fold by 2017, so it's working to provide the best solution for telecom companies to effectively manage their networks.

However, the main reason Cisco is up today is that semiconductor and networking stocks as a whole are gaining. Among them, Micron Technology is leading the way, up 5.2%. For its part, Cisco has been slowly rising since it reported better-than-expected earnings on May 16. Investors have been drawn to the networking company and its low P/E ratio of 13.4, rock-solid balance sheet with more than $5 per share in net cash, and 2.8% dividend yield.

Cisco was added to the Dow in 2009 as a replacement for General Motors. Since being added, the hardware manufacturer has trailed the Dow by nearly 45%. Once a highflying tech darling, the company is now on the radar of value-oriented dividend lovers. Get the lowdown on the routing juggernaut in The Motley Fool's premium report. Click here now to get started.

The article This Dividend Powerhouse Is Leading the Dow Higher originally appeared on Fool.com.

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He owns shares of Cisco Systems. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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