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The board of Amphenol Corporation (NYSE:APH) has announced that it will pay a dividend of $0.21 per share on the 12th of July. Including this payment, the dividend yield on the stock will be 1.1%, which is a modest boost for shareholders' returns.
View our latest analysis for Amphenol
Amphenol's Earnings Easily Cover The Distributions
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, Amphenol's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 10.5% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.
Amphenol Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.105 total annually to $0.84. This means that it has been growing its distributions at 23% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Amphenol has been growing its earnings per share at 23% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
We Really Like Amphenol's Dividend
Overall, we like to see the dividend staying consistent, and we think Amphenol might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Amphenol that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.