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What happened?
In a rare move, U.K.-based auto parts supplier Delphi Automotive (NYSE:DLPH) has increased its dividend. The company is to pay an annual rate of $1.16, which breaks down to $0.29 for each of its quarterly payouts. This amount is 16% higher than its predecessor. The dividend is to be paid on Feb. 29 to stockholders of record as of Feb. 17.

This marks only the second time the company, which began life as the parts division of General Motors (NYSE:GM), has lifted its distribution since returning to the public markets in 2011. Previously, it had exited bankruptcy protection in 2009.

The new dividend yields 1.7% on Delphi Automotive's most recent closing stock price. This is below the current average of stocks on the S&P 500 index, which stands at nearly 2.3%.

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Does it matter?
A 16% dividend raise is rarely bad news, and shareholders will certainly be happy to pocket that extra payout. The car manufacturing industry has been doing gangbusters lately, and shareholders have benefited; former Delphi Automotive parent General Motors, for example, just boosted its dividend (by 6%) and nearly doubled down on a stock buyback program that now reaches $9 billion, on the back of a very good 2015 for the company.

But the success enjoyed by General Motors and its ilk isn't necessarily spreading to supplies. Delphi Automotive's sales guidance for 2016 anticipates flat growth at best, while its projection for per-share earnings came in notably below analyst expectations.

That said, Delphi Automotive's free cash flow figure has been growing robustly. At the end of the most recently reported fiscal year, it stood at over $1.2 billion -- over four times what it paid out in dividends. So even at the enhanced rate, the payout looks safe. That should keep investors interested in the stock, even as they cast an envious eye toward the big manufacturers.

Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.