Top Dividend Growth Stocks: #19 Amphenol

We are counting down the Top Twenty dividend growth stocks. At Number 19 is Amphenol (APH). Amphenol designs and manufactures electrical, electronic, and fiber optic connectors in the US, China, and internationally, as well as antennas, power interconnect products, busbars, and distribution systems.

Amphenol Corp (APH) is ‘First Class,’ failing only 1 of 5 Dividend System criteria. It has ‘Premier’ status being in the upper percentiles of this month’s stock universe. The company increased dividends for 16 years, making it a Dividend Contender 10+. We consider APH to be a Growth stock.

GROWTH:  APH’s 5-year average dividend growth rate is 15.7%, very good the dividend universe average of 12.4%. Free cash flow has grown at an average rate of 9.4% per year for the last 5 years versus the dividend universe at 8.3%, so APH is slightly above the average.

INCOME: APH’s current dividend yield is .8%, less than half of the average at 2.65%. 

SAFETY: We use the Dividend Coverage Ratio to measure the dividend’s safety – higher is better. APH has a DCR of 4.5 which is very good, more than double the minimum of 2. 

VALUATION: The price at time of analysis was $129.50, which we consider Overpriced. A fair price based on historical PE ratio and earnings would be around $92.59. The S&P500’s average PE ratio is 38.42, versus APH’s PE ratio of 33.23,  below the S&P 500 average PE, indicating some value, as compared to our dividend universe. Our ‘Value Rating’ for Amphenol Corp is 1 out of 5.0, meaning that  both PS and PE indicate the stock is very expensive, compared to other dividend stocks available.

TIMING: Historical Yield and PE tell us that APH has ‘No ‘buy’ signal.’ Don’t eliminate a stock based on one factor (or lack thereof). 

QUALITY: Our quality formula gives APH a ‘Quality Rating’ of 4.2 (out of 5), versus the average of 2.7 for this month’s dividend universe.

Compared to all dividend stocks paying 7 years or more of increasing dividends, we rate Amphenol Corp a ‘A.’

What do you think of our analysis and summary? Please let us know in the comments.

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