Covered six times over, priced as growth. Teradyne paid $76 million against $450 million of free cash flow in fiscal 2025, holds effectively no net debt, and has raised the dividend about every two years since 2014 with no cut. At 0.17% the yield is far under the 1% line, so the card is graded warn: the payout is real, but it is not income at this price.
Key risk: Semiconductor test demand is deeply cyclical: Teradyne's cash flow swings with chip capital spending, and the dividend is small enough to ride that out, but the yield stays negligible.
Changes if: Free cash flow payout rises above 60%, or the dividend is cut.
- ✓Cash-flow cover 16.9% of FY2025 free cash flow, pass (<60%).
- ✓Leverage Effectively no net debt, pass.
- ✓Dividend history Payer since 2014; quarterly rate $0.10 in 2020, $0.11 in 2022, $0.12 in 2024, $0.13 in 2026. No cut; raises land about every two years.
- !Yield Yield 0.17%, under the 1% line: a growth holding, not income.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.