Last update on 2024-06-27

Amphenol (APH) - Dividend Analysis (Final Score: 6/8)

In-depth analysis of Amphenol (APH) dividends, evaluating stability and performance using an 8-criteria scoring system. Final Score: 6/8.

Short Analysis - Dividend Score: 6

We're running Amphenol (APH) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Amphenol (APH) scored 6 out of 8 on the dividend policy scoring system. Here's a quick run-down of the eight criteria analyzed: 1. Dividend Yield: Amphenol's dividend yield (currently 0.4287%) has generally been lower than the industry average, focusing instead more on growth. 2. Average Annual Growth Rate: There's significant fluctuation, especially from 2012 onward, and consistency over the 5% mark requires more scrutiny. 3. Payout Ratio: With an average payout ratio of about 7.10% over the last 20 years, Amphenol retains substantial earnings for reinvestment. 4. Dividends and Earnings: The low dividend payout ratio (< 20%) indicates dividends are well-covered by earnings, implying sustainability. 5. Dividends and Cash Flow: Rising free cash flow over two decades exceeds dividend payouts, signaling strong dividend support. 6. Stable Dividends: Since first paying dividends in 2003, shares have grown steadily to $0.425 by 2023. 7. Dividends for 25+ years: Amphenol began paying dividends in 2005, not meeting the 25-year mark yet. 8. Stock Repurchases: Evaluating 20 years of share buybacks illustrates Amphenol's commitment to returning value to shareholders. Overall, Amphenol shows stability, a focus on growth, and strong financial health.

Insights for Value Investors Seeking Stable Income

Considering the stable and growing dividend backed by solid earnings and cash flow, Amphenol (APH) seems like a reliable investment particularly if you're focused on long-term growth rather than immediate high income from dividends. Their commitment to reinvesting earnings into the company suggests a focus on enhancing shareholder value over time. So, if you're an investor looking for long-term financial stability and potential for capital gains, Amphenol (APH) might be worth looking into despite not meeting the 25-year dividend payment criteria.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield is calculated as the annual dividends paid per share divided by the share price. It serves as an indicator of the income generated by an investment in a stock, often expressed as a percentage.

Examining the dividend yield of Amphenol (APH) over the last 20 years, we observe variations such as 0.1356% in 2005, 0.5074% in 2015, and 0.4287% in 2023. While the company's dividend yield crested at 0.5431% in 2018, it generally remained lower than the industry average, which experienced peaks like 2.1% in 2008 and 1.15% in 2019. A higher dividend yield often promises more immediate returns to investors seeking income. However, the relatively low dividend yield for Amphenol hints at a different strategic focus — likely on reinvestment into the business for growth. In summary, while Amphenol's current 0.4287% dividend yield represents stability, it doesn't particularly draw income-focused investors. This trend is somewhat good if the company's emphasis remains on growth and capital gains rather than immediate income distribution.

Average annual Growth Rate higher than 5% in the last 20 years?

Historical Dividend Growth Rate

Based on the Dividend Per Share Ratio values over the past 20 years provided, we can observe significant fluctuations. From 2012 onwards, notable increases are observed, specifically the spike to 600 in 2012, peaking again in 2017 and declining somewhat in following years, though hovering around double digits. Even with these fluctuations, whether the average growth rate has surpassed 5% consistently calls for comprehensive scrutiny.

Average annual Payout Ratio lower than 65% in the last 20 years?

The payout ratio is the percentage of earnings paid out as dividends to shareholders. A lower payout ratio indicates financial stability and room for reinvestment in the company.

Amphenol (APH) has maintained an average payout ratio of approximately 7.10% over the last 20 years. This is significantly lower than the 65% threshold, indicating that the company retains a substantial portion of its earnings for reinvestment and growth. Over the years, the payout ratio has remained well below 20%, peaking at 17.03% in 2017. This conservative payout strategy is positive for shareholders as it suggests the company prioritizes long-term financial stability and growth over short-term dividends. The trend is, therefore, favorable for Amphenol's overall financial health.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings indicates a company's ability to sustain its dividend payments. This ratio of dividends to earnings helps assess the financial health and future sustainability of dividend payouts.

From 2003 to 2023, Amphenol's Earnings per Share (EPS) have consistently risen, from $0.1475 to $3.2322. Dividends per Share (DPS) also increased during this period, from $0 to $0.425. The dividend payout ratio, calculated as DPS covered by EPS, has generally remained under 20%, peaking at around 17-18% in some years. This low payout ratio suggests that Amphenol's dividends are well covered by its earnings, showcasing a prudent dividend policy. The consistently low ratio is favorable, as it indicates potential for future dividend increases and financial stability, even in economic downturns.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow is a ratio that shows how well a company can cover its dividend payments with the free cash flow it generates. It is important because it indicates the sustainability of the company's dividends.

The free cash flow for Amphenol has shown a consistent upward trend from 2003 to 2023, starting at $129.2 million in 2003 and reaching over $2.15 billion by 2023. On the other side, the dividend payout amount, which started at $0 in 2003, peaked to approximately $500.6 million by 2023. The ratio of dividends covered by cash flow has shown an overall positive trend, illustrating Amphenol's growing ability to cover its dividends with free cash flow. This trend is generally good as it shows that the dividends are well supported by the company's cash flow, suggesting financial stability and sustainability. However, it's worth noting that the ratio has some fluctuations, ensuring continuous monitoring.

Stable Dividends Since the Company Began Paying Dividends?

Why stability in dividend payments over the past 20 years is vital for income-seeking investors.

Stable dividends are essential for income-seeking investors because they allow for predictable and reliable income streams. Income stability allows investors to plan their finances with greater certainty. Amphenol (APH) has seen a consistent increase in dividends per share over the past two decades, moving from 0 in 2003 to 0.425 in 2023. The sustainability of these dividends is a strong indicator of a company's financial health and its management's commitment to returning value to shareholders.

Dividends Paid for Over 25 Years?

The criterion of paying dividends for over 25 years indicates a company's ability to consistently generate profit and rewards to its shareholders, showcasing financial stability and shareholder commitment.

Amphenol (APH) has been paying dividends continuously since 2005. Before that, from 1998 to 2004, no dividends were recorded. Therefore, Amphenol (APH) has not yet met the criterion of paying dividends for over 25 years. The positive trend, however, is observed with constant dividend growth annually from 2005 up to 2023, increasing from 0.0075 to 0.425 per share. This ongoing increase is a favorable trend, demonstrating strong financial health and shareholder-friendly policies, even though the 25-year mark hasn't been reached.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Amphenol (APH) and why it is important to consider

Stock repurchases refer to a company's buyback of its own shares from the marketplace. This can signal management's confidence in the company’s future and can be a tax-efficient way to return funds to shareholders compared to dividends. Evaluating whether Amphenol has consistently repurchased stock over the past 20 years is important to understand its capital allocation strategy and how shareholder-friendly the management is.