TE Connectivity (NYSE:TEL) Will Pay A Larger Dividend Than Last Year At $0.56

TE Connectivity Ltd.'s (NYSE:TEL) dividend will be increasing from last year's payment of the same period to $0.56 on 3rd of March. This makes the dividend yield about the same as the industry average at 1.7%.

View our latest analysis for TE Connectivity

TE Connectivity's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. 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 20.4%. 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

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the dividend has gone from $0.72 total annually to $2.24. This means that it has been growing its distributions at 12% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. TE Connectivity has impressed us by growing EPS at 18% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for TE Connectivity's prospects of growing its dividend payments in the future.

We Really Like TE Connectivity's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. For instance, we've picked out 1 warning sign for TE Connectivity that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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