"If you're looking for current income, you look for some of these bigger companies that have nice dividend yields, where you could also possibly participate in the upside of this stock," said Lon Erickson, who helps oversee $9 billion of fixed-income assets as managing director at Santa Fe, New Mexico-based Thornburg Investment Management.

Kraft, the world's biggest confectioner, beat analysts' profit estimates last quarter for the sixth straight time. The Northfield, Illinois-based company pays a quarterly dividend of 29 cents a share and yields 3.79%, 0.15 point higher than its bonds expiring in February 2018.

The shares have gained 13% this year to $30.58. Kraft increased its cash by 65% to $2.85 billion last quarter from a year earlier. The average S&P 500 company has $1.63 billion in cash, excluding financial firms, based on data compiled by Bloomberg.

DuPont, J&J

DuPont Co., which has $3.96 billion in cash and near-term investments, pays 3.86% to shareholders, while bonds expiring in January 2020 yield 3.27%. The third-biggest U.S. chemical maker has surged 25% since the S&P 500 hit the 2010 low in July, compared with an 8% advance for the index, as second-quarter earnings surpassed estimates and the company raised its 2010 profit forecast because of improving global demand.

Shares of Wilmington, Delaware-based DuPont are cheaper than the equity index and the average of its peers, based on the price-earnings ratio of 12.9 using the past year of profit. That compares with 14.7 for the S&P 500 and 18.3 for the average of a group of commodity producers in the index. J&J is also cheaper than the S&P 500, trading at 12.5 times earnings, while Kraft is valued at 14.6.

J&J, Kraft and DuPont all have dividend coverage ratios, or earnings relative to payments, higher than 1. J&J's is 2.3, while Kraft and DuPont have ratios of 1.76 and 1.17, respectively, data compiled by Bloomberg show.

Cash Cushion

S&P 500 companies' cash probably has grown to a record for a seventh straight quarter, according to S&P. For companies that reported so far, balances increased to $824.8 billion in the period ended June 30 from the first three months of the year, based on data from the New York-based firm.

Cash represents 10.2% of total assets at S&P 500 companies, excluding banks and financial firms, according to data compiled by Bloomberg. That's higher than the 9.5% at the end of the second quarter last year, 8.4% in 2008 and 7.95% in 2007.