TE Connectivity's (NYSE:TEL) Dividend Will Be $0.65

The board of TE Connectivity Ltd. (NYSE:TEL) has announced that it will pay a dividend of $0.65 per share on the 6th of September. This will take the dividend yield to an attractive 1.7%, providing a nice boost to shareholder returns.

View our latest analysis for TE Connectivity

TE Connectivity's Earnings Easily Cover The 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 17.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 29%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

TE Connectivity Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.00 in 2014, and the most recent fiscal year payment was $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.

We Could See TE Connectivity's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. TE Connectivity has seen EPS rising for the last five years, at 5.6% per annum. 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 generating plenty of cash, and the earnings also quite easily cover the distributions. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for TE Connectivity that you should be aware of before investing. 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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