Dissecting the Dividend Dynamics of Gentex Corp (GNTX)
A Comprehensive Analysis of the Dividend Performance and Sustainability of Gentex Corp
Gentex Corp (NASDAQ:GNTX) recently announced a dividend of $0.12 per share, payable on 2023-10-18, with the ex-dividend date set for 2023-10-05. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Gentex Corp's dividend performance and assess its sustainability.
About Gentex Corp
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Gentex was founded in 1974 to produce smoke-detection equipment. The company sold its first glare-control interior mirror in 1982 and its first model using electrochromic technology in 1987. Automotive revenue is about 98% of total revenue. The company is constantly developing new applications for the technology to remain on top. Sales in 2022 totaled about $1.9 billion with 44.2 million mirrors shipped. The unit mix breaks out as 65% interior and 35% exterior, versus about 32% exterior in 2020. The company is based in Zeeland, Michigan.
Gentex Corp's Dividend History
Gentex Corp has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Gentex Corp's Dividend Yield and Growth
As of today, Gentex Corp currently has a 12-month trailing dividend yield of 1.49% and a 12-month forward dividend yield of 1.49%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Gentex Corp's annual dividend growth rate was 1.80%. Extended to a five-year horizon, this rate increased to 8.60% per year. And over the past decade, Gentex Corp's annual dividends per share growth rate stands at 7.50%.
Based on Gentex Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Gentex Corp stock as of today is approximately 2.25%.
Is Gentex Corp's Dividend Sustainable?
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Gentex Corp's dividend payout ratio is 0.31.
Gentex Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Gentex Corp's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Gentex Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Gentex Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Gentex Corp's revenue has increased by approximately 4.20% per year on average, a rate that underperforms than approximately 55.82% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Gentex Corp's earnings increased by approximately -6.40% per year on average, a rate that underperforms than approximately 70.83% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -1.60%, which underperforms than approximately 61.41% of global competitors.
Final Thoughts
In conclusion, Gentex Corp has demonstrated a consistent dividend payment record, a moderate dividend growth rate, and a reasonable payout ratio. Its high profitability rank and growth metrics indicate a strong potential for future earnings growth. However, the company's underperformance in revenue and EPS growth compared to its global competitors should be taken into consideration. Therefore, while Gentex Corp's dividends appear sustainable in the short term, potential investors should closely monitor its growth metrics for long-term dividend sustainability.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
