In an effort to enhance its shareholders value, TE Connectivity Ltd. (TEL) declared a 14% increase in its quarterly dividend to 33 cents from 29 cents per share. The increased dividend, effective Apr 2015, will be paid after receiving the shareholders’ nod at the company’s Annual General Meeting on Mar 3, 2015. This would mark the fifth consecutive year of double-digit dividend increase. by the company.
The increased dividend rate brings TE Connectivity’s annual dividend to $1.32 per share, as compared with the earlier figure $1.16. .Based on the closing share price of $61.92 on Dec 17, 2014, the new dividend implies a yield of 2.1%, which is better than the industry average of 1%.
TE Connectivity has always considered rewarding its shareholders with such dividend hikes. Prior to this, in Feb 2013, the company has announced a 16% hike in its quarterly dividend to 29 cents from 25 cents.
The new dividend is well supported by TE Connectivity’s healthy financial position. The company’s cash and cash equivalents at the end of fiscal 2014 stood strong at $2,457 million. Cash from operating activities amounted to $749 million, while free cash flow was $661 million.
With approximately 416 million weighted shares outstanding at the end of fourth-quarter 2014, the company needs to dish out approximately $549 million per year as dividend. Its strong financial position cushions the payout well.
TE Connectivity, with a comprehensive portfolio, remains the market leader in the connectivity business. The company remains focused on driving its growth both organically and through acquisitions. For the next five years, its business is anticipated to grow at an annual rate of 15%.
TE Connectivity carries a Zacks Rank #3 (Hold). Some better-ranked stocks that can be considered include Active Power Inc. (ACPW), AU Optronics Corp. (AUO) and AVX Corp. (AVX), all three sporting a Zacks Rank #1 (Strong Buy).
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