Comfort Zone Investing: Intel is saying something ... can you hear it?

But you may not own Intel. So why should you care? Because raising the dividend is sending two messages to investors, all investors.

The first message is simple: Intel thinks the worst of the economic mess is over, that growth is coming back, not necessarily the rapid expansion of the 90's but enough to boost its quarterly reward to shareholders. Intel believes it can sustain the new, higher levels of payments because sales and profits will improve. It's seeing better orders from Asia, especially China, where the economy is recovering faster than other parts of the globe, especially the U.S.

As an international company, Intel isn't restrained by domestic demand. It sells everywhere. (With a weak dollar, its products are more attractive to foreign buyers.) And being in the semiconductor business, a mainstay of modern times, it is a sensitive barometer for economic conditions. One of the first expenditures most companies and individuals make when they can afford it is to buy better technology. It improves efficiency. That improves profits for businesses or saves time for individuals.

Intel must be seeing good order flow because without it, the board of directors would never approve a higher dividend. That's because every company is loathe to cut its dividend. Some investors buy a stock only for its quarterly payout. If the company cuts it, they sell. Then the stock goes down. Companies don't raise dividends lightly. They have to be sure, or at least with as much confidence as any business decision is made, that the quarterly payment is sustainable, that future payments can be made with almost certainty. While Intel's yield isn't one an investor can retire on, it is fairly attractive in a world where CD's pay a little over 1%. Of course, that CD is insured by the FDIC (still a comfort?) and there is much more risk in owning a stock. Still, that risk is being rewarded.

The other message Intel is sending is about growth. While it is seeing positive growth, it isn't confident it will be that strong. That's because a strong, powerful expanding economy produces business opportunities, opportunities that require capital to exploit. Buying other companies or building new plants to meet rising demand takes capital. So does paying a dividend. Every penny Intel pays to shareholders is one less it has for growth.

Tech companies used to be all about growth, huge growth. That's why they were given large P/E (price to earnings) multiples, sometimes 100 or more. Investors believed the future was almost boundless, that earnings would continue to improve forever, and that tech companies would continuously grow earnings as the world needed more and better technology. Intel's forward P/E is 13.8 as of this writing. Microsoft's (MSFT) forward P/E is 14.4. Investors aren't seeing great growth when they only pay these rather small prices (in terms of P/E ratios) for the future.

Intel sees the same thing. It wouldn't be raising the dividend again if it saw great opportunities for expansion. It would conserve its capital and give shareholders better returns through earnings growth rather than paying out precious capital as a dividend.

That's probably the most important part of the Intel raise: tech isn't what it used to be nor does it appear strong growth is on the horizon. Yes, better times are ahead but not great times. Lower your investment expectations accordingly.

Ted Allrich is the founder of The Online Investor, chairman of the board of Bank of Internet USA, as well as the author of the book Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.