Investors who want to cash in on TE Connectivity Ltd’s (NYSE:TEL) upcoming dividend of $0.4 per share have only 3 days left to buy the shares before its ex-dividend date, 22 February 2018, in time for dividends payable on the 09 March 2018. Should you diversify into TE Connectivity and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. Check out our latest analysis for TE Connectivity
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share risen in the past couple of years?
- Is it able to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does TE Connectivity fit our criteria?
The company currently pays out 45.26% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect TEL’s payout to fall to 29.52% of its earnings, which leads to a dividend yield of 1.67%. However, EPS should increase to $4.27, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of TEL it has increased its DPS from $0.56 to $1.6 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes TEL a true dividend rockstar. Relative to peers, TE Connectivity has a yield of 1.57%, which is on the low-side for Electronic stocks.
Taking into account the dividend metrics, TE Connectivity ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three key aspects you should look at:
- 1. Future Outlook: What are well-informed industry analysts predicting for TEL’s future growth? Take a look at our free research report of analyst consensus for TEL’s outlook.
- 2. Valuation: What is TEL worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether TEL is currently mispriced by the market.
- 3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.