Why NYSE:TEL provides a good dividend, while having solid fundamentals.

Consider TE CONNECTIVITY LTD (NYSE:TEL) as a top pick for dividend investors, identified by our stock screening tool. NYSE:TEL shines in terms of profitability, solvency, and liquidity, all while paying a decent dividend. Let's dive deeper into the analysis.

How do we evaluate the Dividend for NYSE:TEL?

ChartMill assigns a Dividend Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing various dividend elements, such as yield, historical performance, dividend growth, and sustainability. NYSE:TEL has been awarded a 7 for its dividend quality:

• Compared to an average industry Dividend Yield of 2.17, TEL pays a better dividend. On top of this TEL pays more dividend than 92.74% of the companies listed in the same industry.
• The dividend of TEL is nicely growing with an annual growth rate of 6.41%!
• TEL has been paying a dividend for at least 10 years, so it has a reliable track record.
• TEL has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
• 37.96% of the earnings are spent on dividend by TEL. This is a low number and sustainable payout ratio.
• TEL's earnings are growing more than its dividend. This makes the dividend growth sustainable.

How We Gauge Health for NYSE:TEL

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:TEL has earned a 7 out of 10:

• An Altman-Z score of 4.49 indicates that TEL is not in any danger for bankruptcy at the moment.
• With a decent Altman-Z score value of 4.49, TEL is doing good in the industry, outperforming 75.81% of the companies in the same industry.
• TEL has a debt to FCF ratio of 1.75. This is a very positive value and a sign of high solvency as it would only need 1.75 years to pay back of all of its debts.
• TEL has a better Debt to FCF ratio (1.75) than 75.81% of its industry peers.
• TEL has a Debt/Equity ratio of 0.31. This is a healthy value indicating a solid balance between debt and equity.
• Even though the debt/equity ratio score it not favorable for TEL, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

Understanding NYSE:TEL's Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:TEL was assigned a score of 7 for profitability:

• TEL has a better Return On Assets (8.80%) than 88.71% of its industry peers.
• The Return On Equity of TEL (16.54%) is better than 86.29% of its industry peers.
• With an excellent Return On Invested Capital value of 13.39%, TEL belongs to the best of the industry, outperforming 83.87% of the companies in the same industry.
• TEL had an Average Return On Invested Capital over the past 3 years of 14.33%. This is above the industry average of 9.91%.
• TEL has a Profit Margin of 11.91%. This is amongst the best in the industry. TEL outperforms 91.94% of its industry peers.
• TEL has a Operating Margin of 16.68%. This is amongst the best in the industry. TEL outperforms 91.13% of its industry peers.

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Check the latest full fundamental report of TEL for a complete fundamental analysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.