As an income-driven investor I tend to look for sustainable dividend paying stocks that are currently experiencing an uptrend, which has a tendency to signal a buying mode for traders. For a stock to be considered in an uptrend, shares must be simultaneously trading above their current 20-day, 50-day and 200-day simple moving averages. In this article, I wanted to focus on two dividend paying companies within the tech sector that have risen at least 6% since January 1st and have also increased their respected dividends at least 3 times since the second half of 2009. .
Microchip Technology, Inc. (MCHP) - Based in Chandler, Arizona, the company "engages in the development, manufacture, and sale of semiconductor products for embedded control applications. The company offers microcontrollers, such as 8-bit, 16-bit, and 32-bit microcontrollers marketed under the PIC brand name, as well as 16-bit dsPIC digital signal controllers; and development tools that enable system designers to program a PIC microcontroller and dsPIC DSC for specific applications".
Shares of MCHP, which are currently priced at $36.47 and yield 3.87% ($1.41) are considered to be in the midst of an uptrend since they are trading 2.66% above their 20-DSMA, 7.92% above their 50-DSMA, and 13.42% above their 200-DSMA. Income investors should note that MCHP has increased its quarterly dividend a total of fourteen times (which equates to either an increase of $0.014/share or 4.12%) since August 2009. Growth investors should also note that shares of MCHP have risen 8.06% since January 1st.
According to Steve Sanghi, Chairman, President and CEO of Microchip Technology "Microchip grew its cash and investments balance to $1.77 billion at December 31, 2012, and our cash generation continues to be very strong. Our Board of Directors authorized an increase in our quarterly cash dividend to a record 35.3 cents per share, a demonstration of our ongoing commitment to return value to our stockholders".
Texas Instruments, Inc. (TXN) - Based in Dallas, Texas, the company engages "in the design, manufacture, sale of semiconductors to electronics designers and manufacturers worldwide and operates in four segments: Analog, Embedded Processing, Wireless, and DLP".
Shares of TXN, which are currently priced at $34.43 and yield 2.50% ($0.84) are considered to be in the midst of an uptrend since they are trading 2.51% above their 20-DSMA, 5.97% above their 50-DSMA, and 17.66% above their 200-DSMA. Income investors should note that TXN has increased its quarterly dividend a total of five times (which equates to either an increase of $0.17/share or 154.54% and includes the company's most recent dividend increase explained below) since July 2009. Growth investors should also note that shares of TXN have risen 6.47% since January 1st.
On February 21st it was announced that the company would increase its quarterly dividend by 33 percent, from $0.21 per share to $0.28, payable May 20, 2013, to shareholders of record on April 30, 2013.
One of the things potential investors need to consider with regard to the company's recent dividend increase is the fact that, "Over the past few years, TI has built a business model for growth and high margins with its focus on Analog and Embedded Processing semiconductors. As a result, TI believes it can consistently convert 20-25 percent of its revenue into free cash flow* and return 100 percent of that free cash flow (less debt repayment) to shareholders".
For potential investors who may be interested in establishing a position in either Microchip Technology or Texas Instruments, I'd continue to pay close attention to each company's current uptrend as well as their dividend behavior. If either company can continue to trade in an uptrend while maintaining or even increasing their respected dividends I see no reason why a position should not be established at current levels.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.