TE Connectivity (NYSE:TEL) Will Pay A Dividend Of $0.65

TE Connectivity Ltd.'s (NYSE:TEL) investors are due to receive a payment of $0.65 per share on 6th of December. This will take the annual payment to 1.7% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for TE Connectivity

TE Connectivity's Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, TE Connectivity's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to fall by 14.9% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 28%, which we are pretty comfortable with and we think is feasible on an earnings basis.

TE Connectivity Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.00 in 2014 to the most recent total annual payment of $2.60. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 3.7% per year. While EPS growth is quite low, TE Connectivity has the option to increase the payout ratio to return more cash to shareholders.

TE Connectivity Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for TE Connectivity that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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