General Mills (NYSE: GIS), arch competitor of fellow cereal seller Kellogg (NYSE: K), posted some good news for shareholders on Monday. In an otherwise gloomy day that saw the Dow remain below the 12,000 level and inflationary pressures still exerting a hold over the market, General Mills proved that dividends are at least one island of safety in a sea of trouble.

The company indicated that it will now pay an annual dividend of $1.72 per share. Previously, the annual dividend was set at $1.57 per share. This is a nice example of double-digit appreciation of approximately 10%. Based on Monday's closing price, General Mills' stock now yields a hearty 2.7%.

As a long-term idea, General Mills is certainly one of the best. As I observed with Kellogg, you can put this one on perpetual dollar-cost-averaging. However, with the stock in 52-week-high territory, and with prices for commodities, especially corn, still exerting a negative effect on businesses, I'd be a bit cautious about entering just now. Is it possible one might get General Mills closer to a 3% yield? I can't predict the short-term future, but my gut says that a pullback is inevitable. Even with cool dividend increases, stocks can return to the low end of a 52-week range at any point. Just look at Coca-Cola (NYSE: KO) and the recent pressure its stock has been under. And Coke is a dividend stalwart. Nevertheless, I am bullish on General Mills' future. Just watch out for commodity trends, and perhaps remain patient for better prices on the shares.

Disclosure: I own Coke; positions can change at any time.

AT&T (NYSE: T) is recently trading at $39 in pre-open trading, above its close of $37.90. T announced a 12.7% dividend increase and a new 400 million share repurchase plan. T overall option implied volatility of 31 is above its 26-week average of 28 according to Track Data, suggesting larger risk.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com