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

    3,362.75
    -20.25 (-0.60%)
     
  • Dow Futures

    27,200.00
    -165.00 (-0.60%)
     
  • Nasdaq Futures

    11,535.25
    -52.75 (-0.46%)
     
  • Russell 2000 Futures

    1,573.70
    -15.30 (-0.96%)
     
  • Crude Oil

    38.69
    -0.88 (-2.22%)
     
  • Gold

    1,909.40
    -2.50 (-0.13%)
     
  • Silver

    24.45
    -0.12 (-0.49%)
     
  • EUR/USD

    1.1781
    -0.0008 (-0.07%)
     
  • 10-Yr Bond

    0.7780
    -0.0230 (-2.87%)
     
  • Vix

    33.35
    +0.89 (+2.74%)
     
  • GBP/USD

    1.3038
    -0.0004 (-0.03%)
     
  • USD/JPY

    104.2730
    -0.2210 (-0.21%)
     
  • BTC-USD

    13,730.45
    +35.16 (+0.26%)
     
  • CMC Crypto 200

    271.48
    +10.19 (+3.90%)
     
  • FTSE 100

    5,728.99
    -63.02 (-1.09%)
     
  • Nikkei 225

    23,415.41
    -70.39 (-0.30%)
     

Gentex Corporation (NASDAQ:GNTX) Passed Our Checks, And It's About To Pay A US$0.12 Dividend

Simply Wall St
·4 mins read

It looks like Gentex Corporation (NASDAQ:GNTX) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 8th of October to receive the dividend, which will be paid on the 21st of October.

Gentex's next dividend payment will be US$0.12 per share, on the back of last year when the company paid a total of US$0.48 to shareholders. Based on the last year's worth of payments, Gentex has a trailing yield of 1.8% on the current stock price of $26.01. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Gentex has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Gentex

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Gentex paid out a comfortable 39% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 33% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Gentex earnings per share are up 3.9% per annum over the last five years. Recent earnings growth has been limited. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Gentex has lifted its dividend by approximately 8.1% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Should investors buy Gentex for the upcoming dividend? Earnings per share growth has been growing somewhat, and Gentex is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but Gentex is being conservative with its dividend payouts and could still perform reasonably over the long run. Overall we think this is an attractive combination and worthy of further research.

Wondering what the future holds for Gentex? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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@simplywallst.com.