Amphenol Corporation’s (NYSE:APH) dividend will be increasing from last year’s payment of the same period to $0.22 on 10th of January. This takes the annual payment to 1.1% of the current stock price, which unfortunately is below what the industry is paying.
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Amphenol’s Dividend Is Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Amphenol was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 13.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 27%, which is in the range that makes us comfortable with the sustainability of the dividend.
Amphenol Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.105 in 2013 to the most recent total annual payment of $0.88. This means that it has been growing its distributions at 24% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven’t been any cuts for a long time.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Amphenol has seen EPS rising for the last five years, at 21% per annum. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
We Really Like Amphenol’s Dividend
Overall, a dividend increase is always good, and we think that Amphenol is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 14 analysts we track are forecasting for Amphenol for free with public analyst estimates for the company. Is Amphenol not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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