This article will examine five tech stocks to determine whether their growth potential and dividend quality could make them good additions to your portfolio. Three are good buys, but two should be avoided because they are value traps.

Microchip Technology Incorporated (MCHP) MCHP has a market cap of $6.38 billion with a price-to-earnings ratio of 15.45. The stock has traded in a 52-week range of $29.30 and $41.50. The stock is currently trading around $34. The company reported first quarter revenue for the period ending on June 30th, in the amount of $375 million, compared with revenue of $321 million in the first quarter of 2010. First quarter net income was $99.3 million compared with net income of $89.6 million in the first quarter of 2010.

One of MCHP’s competitors is STMicroelectronics N. V. (STM). STM is currently trading around $8 with a market cap of $6.65 billion and a price-to-earnings ratio of 6.73. STM pays a dividend, which yields 4.5% versus MCHP, whose dividend yields 4.1%.

MCHP is a high-growth semiconductor manufacturer. The company increased year-over-year second quarter revenue by 16% and second quarter net income by 10%. Net income for 2010 increased by 93% to $419 million from $217 million in 2009. MCHP has also been an above average dividend paying company. The company has been paying quarterly dividends since 2002 and has increased its dividend by 93% since 2006. On October 14, the company made a downward earnings revision, citing lower-than-expected Christmas demand. To continue reading, click here