The Best Dividend Stocks screen starts from a simple premise: a dividend is only attractive if it can be sustained. The screen applies a ChartMill Dividend Rating of at least 7, while also requiring a Profitability Rating of at least 5 and a Health Rating of at least 5. That combination is designed to avoid the common trap of a high yield attached to a deteriorating business. Among the stocks that currently meet these criteria is TE CONNECTIVITY PLC (NYSE:TEL), a company providing connectivity and sensor solutions across transportation, industrial, and data infrastructure markets.
A dividend profile built on sustainability
TEL carries a ChartMill Dividend Rating of 8 out of 10, supported by a yield that is modest on the surface but strong relative to its sector. The stock yields 1.51% versus an industry average of 0.50%, and it pays a better dividend than more than 93% of its industry peers. The more important part of the rating is the track record behind it.
TEL has paid a dividend for at least 10 years and has not reduced it during that period. Dividend growth averages 7.55% per year, and the payout ratio stands at a conservative 28.25% of earnings. That leaves plenty of room for the company to maintain or increase the distribution even if earnings come under pressure. In addition, earnings are growing faster than the dividend, which points to a payout that is not being stretched over time.
Profitability and health underpin the payout
The screen’s minimum thresholds matter because dividend sustainability ultimately depends on the quality of the underlying business. TEL scores 8 on profitability and 7 on health, so it clears both hurdles with room to spare.
Key metrics from the ChartMill fundamental report:
- Dividend rating: 8/10
- Dividend yield: 1.51% versus 0.50% industry average
- Payout ratio: 28.25%
- Average annual dividend growth: 7.55%
- Profitability rating: 8/10
- Return on equity: 22.77%
- Return on invested capital: 14.61%
- Operating margin: 20.49%
- Health rating: 7/10
- Altman-Z score: 5.15
- Debt to free cash flow: 1.70
The profitability figures show a company that consistently generates strong returns, while the health metrics point to a balance sheet that can absorb cyclical pressure. A debt to free cash flow ratio of 1.70 means TEL could pay off all of its debts in less than two years using free cash flow, and the Altman-Z score of 5.15 indicates a low near-term bankruptcy risk. Those characteristics are exactly what income investors should look for when a dividend yield appears attractive.
Investors who want to review the full fundamental breakdown can use this fundamental analysis report.
The bottom line for dividend investors
TEL is not a high-chasing yield pick; it is a quality-oriented dividend candidate. The combination of an 8/10 dividend rating, an 8/10 profitability rating, and a 7/10 health rating suggests the dividend is backed by earnings power and a solid financial position. For investors focused on income, the sustainability of the payout matters more than the headline yield, and TEL scores well on that basis.
Investors looking for more stocks that pass the same methodology can explore additional candidates using the Best Dividend Stocks screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
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TE Connectivity (NYSE:TEL): A Dividend Quality Stock with a Sustainable Payout
The Best Dividend Stocks screen starts from a simple premise: a dividend is only attractive if it can be sustained. The screen applies a ChartMill Dividend Rating of at least 7, while also requiring a Profitability Rating of at least 5 and a Health Rating of at least 5. That combination is designed to avoid the common trap of a high yield attached to a deteriorating business. Among the stocks that currently meet these criteria is TE CONNECTIVITY PLC (NYSE:TEL), a company providing connectivity and sensor solutions across transportation, industrial, and data infrastructure markets.
A dividend profile built on sustainability
TEL carries a ChartMill Dividend Rating of 8 out of 10, supported by a yield that is modest on the surface but strong relative to its sector. The stock yields 1.51% versus an industry average of 0.50%, and it pays a better dividend than more than 93% of its industry peers. The more important part of the rating is the track record behind it.
TEL has paid a dividend for at least 10 years and has not reduced it during that period. Dividend growth averages 7.55% per year, and the payout ratio stands at a conservative 28.25% of earnings. That leaves plenty of room for the company to maintain or increase the distribution even if earnings come under pressure. In addition, earnings are growing faster than the dividend, which points to a payout that is not being stretched over time.
Profitability and health underpin the payout
The screen’s minimum thresholds matter because dividend sustainability ultimately depends on the quality of the underlying business. TEL scores 8 on profitability and 7 on health, so it clears both hurdles with room to spare.
Key metrics from the ChartMill fundamental report:
The profitability figures show a company that consistently generates strong returns, while the health metrics point to a balance sheet that can absorb cyclical pressure. A debt to free cash flow ratio of 1.70 means TEL could pay off all of its debts in less than two years using free cash flow, and the Altman-Z score of 5.15 indicates a low near-term bankruptcy risk. Those characteristics are exactly what income investors should look for when a dividend yield appears attractive.
Investors who want to review the full fundamental breakdown can use this fundamental analysis report.
The bottom line for dividend investors
TEL is not a high-chasing yield pick; it is a quality-oriented dividend candidate. The combination of an 8/10 dividend rating, an 8/10 profitability rating, and a 7/10 health rating suggests the dividend is backed by earnings power and a solid financial position. For investors focused on income, the sustainability of the payout matters more than the headline yield, and TEL scores well on that basis.
Investors looking for more stocks that pass the same methodology can explore additional candidates using the Best Dividend Stocks screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »