TE Connectivity (NYSE:TEL) Has Announced That It Will Be Increasing Its Dividend To $0.59

The board of TE Connectivity Ltd. (NYSE:TEL) has announced that it will be paying its dividend of $0.59 on the 1st of December, an increased payment from last year's comparable dividend. This will take the annual payment to 1.9% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for TE Connectivity

TE Connectivity's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, TE Connectivity's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 35.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

TE Connectivity Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.84 in 2013 to the most recent total annual payment of $2.36. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that TE Connectivity has been growing its earnings per share at 14% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

TE Connectivity Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 15 analysts we track are forecasting for TE Connectivity for free with public analyst estimates for the company. Is TE Connectivity not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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