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Summer Love: A Tech Stock Where Dividends Increase

NEW YORK ( TheStreet) -- Summertime is in full swing. This is the season of the year when millions head for the mountains or the seashore to commune with nature.

Camping is one of the most popular pastimes during summer. There's nothing like spreading out your sleeping bag under the stars while listening to the sound of a babbling brook nearby.

Now that I have your attention -- picture this. You recently purchased 100 shares of KLA-Tencor (KLAC - Get Report) at around $54 a share.

You're camping by a pristine stream in the mountains and a member of your investment club is hiking by with a big smile on her face.

"What are you looking so pleased about?" you inquire. "I just read an announcement that KLA-Tencor is raising its quarterly dividend 12.5% to 45 cents per share," she replies confidently.

"I found out that it's the fifth dividend increase since KLA-Tencor first instituted its dividend back in April 2005. With the most recent quarter's EPS results set to be announced on July 25th analysts are anticipating that the dividend payout ratio will remain at a modest 40%, sustainable level."

It's a cool day with a gentle breeze. You built a crackling campfire and are roasting marshmallows while your freshly brewed pot of organic Earl Grey tea is cooling down to a drinkable temperature.

"Are you certain about that?" you ask with a note of skepticism. "Absolutely, I even checked it out at minutes before I left the office for the trailhead to begin my hike," she replies

She's obviously pleased because she owns shares, too, and to make matters sweeter the stock has popped 4.8% higher in one day to a new 52-week high price of $58.48.

You realize this is a cause for celebration so you ask her to sit by the fire and roast a marshmallow with you and enjoy some of your aromatic tea. She says "be glad to" and then says, "I bought shares of KLAC at $55. With the annual dividend at $1.80 I'm going to be receiving a 3.27% annual yield."
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