Advertisement
U.S. markets open in 9 hours 20 minutes
  • S&P Futures

    5,207.75
    -7.00 (-0.13%)
     
  • Dow Futures

    39,204.00
    -19.00 (-0.05%)
     
  • Nasdaq Futures

    18,179.50
    -52.00 (-0.29%)
     
  • Russell 2000 Futures

    2,047.50
    -2.30 (-0.11%)
     
  • Crude Oil

    82.52
    -0.20 (-0.24%)
     
  • Gold

    2,164.90
    +0.60 (+0.03%)
     
  • Silver

    25.33
    +0.07 (+0.28%)
     
  • EUR/USD

    1.0879
    +0.0002 (+0.02%)
     
  • 10-Yr Bond

    4.3400
    +0.0360 (+0.84%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2725
    -0.0004 (-0.03%)
     
  • USD/JPY

    149.7230
    +0.6250 (+0.42%)
     
  • Bitcoin USD

    65,598.92
    -2,143.79 (-3.16%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,591.37
    -149.07 (-0.38%)
     

Garmin (NASDAQ:GRMN) Is Paying Out A Larger Dividend Than Last Year

Garmin Ltd. (NASDAQ:GRMN) has announced that it will be increasing its dividend on the 30th of June to US$0.67. This makes the dividend yield about the same as the industry average at 1.7%.

Check out our latest analysis for Garmin

Garmin's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, Garmin was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to fall by 0.3% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 47%, which we are pretty comfortable with and we think is feasible on an earnings basis.

historic-dividend
historic-dividend

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The first annual payment during the last 10 years was US$1.50 in 2011, and the most recent fiscal year payment was US$2.68. This works out to be a compound annual growth rate (CAGR) of approximately 6.0% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Garmin might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Garmin has seen EPS rising for the last five years, at 17% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Garmin Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Garmin that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Advertisement