TE CONNECTIVITY PLC (NYSE:TEL): A Top Dividend Stock for Sustainable Income

In the search for dependable dividend income, investors frequently use methodical screening techniques that focus on both high yields and the essential financial soundness and longevity of a company. One method uses a filter for stocks with a high ChartMill Dividend Rating, which measures different parts of dividend quality, while also requiring good scores in profitability and financial condition. This method seeks to find companies able to continue and increase their dividends over the long term, instead of only following the highest present yields, which can occasionally be deceptive or not lasting.

TE CONNECTIVITY PLC (NYSE:TEL) appears as a strong candidate from this screening process. The company, which offers connectivity and sensor solutions for industries including transportation, renewable energy, and medical technology, shows a stable profile that fits the standards for reliable dividend investing.

Dividend Strength and Sustainability
TEL’s dividend profile is marked by steadiness and steady increase, important qualities for income-oriented investors. The company provides a dividend yield of 1.42%, which might seem average initially but is in fact strong compared to its industry, doing better than 90% of similar companies in the electronic equipment and components field. Significantly, TEL has raised its dividend at a yearly rate of 6.79% over the last several years and has kept continuous payments for more than ten years, showing a steady dedication to shareholders.

The durability of these payments is backed by a payout ratio of 54.3%, which, although somewhat elevated, is still acceptable considering the company’s consistent earnings and positive free cash flow. This is important because a very high payout ratio can indicate a possible threat to future dividends if earnings fall. For TEL, earnings increase has been faster than dividend growth, offering a safety margin and strengthening the dividend’s dependability.

Profitability and Operational Health
A solid profitability base is necessary for dividend durability, and TEL performs well here with a ChartMill Profitability Rating of 8. The company’s return on invested capital (ROIC) is 13.51%, placing it with the best in its industry and showing effective use of capital. Operating margins of 19.3% more clearly show operational strength, doing better than 97% of industry competitors. These numbers not only back ongoing dividend payments but also imply the company has the monetary room to fund growth while giving rewards to shareholders.

Financial Stability and Balance Sheet Strength
TEL’s financial condition, shown in a good Health Rating of 7, supports its capacity to maintain dividends even in times of economic instability. The company keeps a careful debt-to-equity ratio of 0.39 and has been lowering its share count over time, which can improve per-share returns and dividend coverage. While liquidity ratios like current and quick ratios are points to watch, they are balanced by firm solvency measures, including a sound Altman-Z score of 4.88, showing minimal bankruptcy risk and general financial strength.

Valuation and Growth Prospects
Regarding valuation, TEL trades at a P/E ratio of 24.8, which is fair compared to both industry norms and wider market benchmarks. Projected earnings growth of about 10.62% per year implies the company is in a good position to keep its dividend growth path. This mix of fair valuation and positive growth view lowers the danger of overpayment while supporting future income possibility.

For investors curious about finding comparable dividend options, the Best Dividend Stocks screener provides a selected list of companies meeting these strict standards. A full fundamental analysis report for TEL can be found here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation and risk tolerance before making investment decisions.