Friday, April 29, 2011

Stopping Microchip Technology, MCHP - just in case!

Microchip Technology, MCHP has doubled during the time I have owned it.  It paid a healthy and ever increasing dividend. MCHP was my first dividend machine.  However, they did not pay a dividend in March and I believe this is due to the fact that they paid a double dividend in December.  In other words  the March dividend was paid in December along with the December dividend.

I believe the thinking was that if we income investors received the dividend in December and the government increased the tax on dividend in 2011, we received the benefit of a dividend paid early at a potentially lower tax.

Since, the tax rate on dividends did not change, they could have waited until March but did not and paid it in December.  I like receiving the dividend early.   I want to make sure I do not lose my terrific gain so I am placing a stop at 10% below the high.

If MCHP continues the dividend march and pays the dividend or even increases the dividend in June, I will take off the stop because MCHP has been a great dividend machine.

Very Truly Yours,
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