UPDATE 1-Applied Materials boosts dividend, sets buyback

* Lifts quarterly div to 7 cts/shr from 6 cts/shr.

* Sets $2 billion share repurchase plan

NEW YORK, March 8 (Reuters) - Semiconductor equipment maker Applied Materials Inc (AMAT.O) said on Monday its board of directors has raised its quarterly dividend 17 percent and set a plan to buy back up to $2 billion in stock.

The company said it would now pay a dividend of 7 cents a share, up from its current payout of 6 cents a share, which represents a yield of about 1.95 percent.

Applied Materials last raised its dividend in March 2007.

Its board also approved a new stock repurchase program authorizing up to $2 billion in repurchases over a period ending in March 2013.

"Applied's strong financial position and operating cash flow enable us to invest in growth opportunities throughout our businesses as well as return cash to stockholders," Chairman and Chief Executive Officer Mike Splinter said.

Applied Materials's shares rose 4 cents to $12.33 in morning trading on Nasdaq. (Reporting by Franklin Paul, editing by Maureen Bavdek)