Recent signals have indicated that the tech sector may be ready to surge higher, and investors could double their pleasure by racking up growth and yields in some of the sector’s finest dividend stocks.

Buying tech stocks for their yield? Last Thursday’s announcement from Seagate Technology (STX) that it was reinstating its dividend combined with an improved earnings outlook spurred a 9% surge in the stock on Friday.

Since last September, tech giants such as Microsoft (MSFT), Intel (INTC), and Hewlett Packard (HPQ) have all increased their dividends. These cash-rich companies have responded to investor interest in dividends but still have significantly underperformed the market averages so far in 2011.

Though most of these dividend-paying tech stocks have not yet completed weekly bottom formations, there are valid fundamental reasons why the high-yielding tech stocks might be worth a look.

When the inflation rate is rising, multinational, cash-rich, dividend-paying stocks should do well, benefited by a weaker dollar. With the latest producer and consumer price numbers out at the end of the week, these tech stocks may be just what your portfolio needs.

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Chart Analysis: Of the three technology stocks I have selected, Seagate Technology (STX), with last week’s surge, clearly has the best chart. The short-term weekly downtrend (line b) was overcome two weeks ago and STX is up sharply from the March lows. At Friday’s close at $15.84, the 18-cent quarterly dividend works out to a yield of 4.5%.

  • The long-term downtrend (line a) is in the $17.60 area with stronger resistance from 2010 in the $19.20-$21.58 area

  • The weekly chart has initial support now at $15-$15.35 with much stronger support in the $14.20-$14.60 area. The weekly uptrend, line c, is now in the $12.60 area

  • The weekly on-balance volume (OBV) has confirmed the price action by moving above the resistance at line d. The OBV did confirm the 2010 highs, which is a positive sign

NEXT: Latest Chart Analysis for Intel and Microsoft

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Intel (INTC) dropped to test the 61.8% support level last week but closed well off the worst levels. On the weekly chart, there is major resistance at $21.74-$22.21. With Friday’s close at $20.02, the current yield is 3.6%.

  • Last week’s low at $19.36 now represents first important support with further support at $18.77-$19

  • The weekly OBV made new highs early in the year, which suggests that INTC is being accumulated. The weekly uptrend (line c) has been tested, but a close above its weighted moving average (WMA) is needed to signal that the pullback is over

  • The daily OBV is still in a downtrend that does allow for a pullback early this week

  • Initial resistance now at $20.38-$20.66 and a close above this resistance this week would validate last week’s potentially bullish candle formation. There is further resistance at $21.15

Microsoft (MSFT) closed on important weekly support, line e, in mid-March, where prices have attempted to stabilize. With Friday’s close at $26.07, the current yield is 2.5%.

  • The weekly chart has next resistance at $26.86-$27.37 with the weekly downtrend now in the $29 area

  • The weekly OBV did make new correction lows in March and is still below its weighted moving average. In contrast, the daily volume shows a potential bottom formation and has moved back above its WMA

  • There is initial support for MSFT now at $25.15-$25.30 and more important support at $24.68 and the March lows

What It Means: Even though STX has a very bullish weekly technical outlook, the relatively attractive yields and high cash levels of INTC and MSFT suggest they may present low-risk buying opportunities this week.

Of course, the better relative performance of the market internals, especially the Nasdaq 100’s A/D line, also suggests to me that the tech sector may lead the market as we head into the summer.

How to Profit: The recent sharp gains in STX make it only attractive from a risk-control standpoint on a pullback. I would recommend going 50% long STX at $15.28 and 50% long at $14.78 with a stop at $13.79 (risk of approx. 8.3%).

The daily analysis of INTC suggests it could pull back towards last week’s lows before a bottom is completed. I would look to go 50% long at $19.74 and 50% long at $19.42 with a stop at $18.57 (risk of approx. 5.2%).

MSFT looks close to completing a bottom formation, and I would go 50% long at $25.44 and 50% long at $24.92 with a stop at $24.26 (risk of approx. 3.7%).