Intel Raises Dividend

Intel Corp (INTC - Analyst Report) raised the quarterly cash dividend by 12.5%, totaling 63 cents a share in 2010. The dividend yield comes to 3.1%.

The company has been paying a cash dividend for the last 17 years and has raised the dividend 14 times since it started.

Intel has over $8 billion of net cash on its balance sheet, or around $1.58 a share. The $1.25 billion payment to Advanced Micro Devices (AMD - Analyst Report) will take another 23 cents a share off the cash balance.

The remaining cash ($1.35 a share) is sufficient to fund its growth plans, even after paying the higher rate of dividend. We also expect Intel to continue generating strong cash flows, based on its leading market position and product development strategies.

Intel’s announcement comes as an indication of the technology turnaround. However, the company is not the first to recognize the gain, or pass it to investors. Texas Instruments (TXN - Analyst Report) announced a nice raise in September, as the company started seeing broad-based strength in its business.

Chip companies have rallied strongly from the downturn, both due to changes in market dynamics and a more cautious approach by most players. Companies like Linear Technology (LLTC - Analyst Report), Maxim Integrated Products (MXIM - Analyst Report), Analog Devices (ADI - Analyst Report), National Semiconductor (NSM - Analyst Report) and TI were all quick to cut inventories at the first signs of the recession.

The companies also benefited from the growing demand in Asia, as a lot of the manufacturing and particularly, assembling has shifted to the region. Another positive for these companies has been the growing consumption of electronic goods in Asia. Therefore, despite the recession, demand has held up relatively better than other sectors in the recession-dampened U.S. and Europe.

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