Should Income Investors Buy Gentex Corporation (NASDAQ:GNTX) Before Its Ex-Dividend?
If you are interested in cashing in on Gentex Corporation’s (NASDAQ:GNTX) upcoming dividend of $0.11 per share, you only have 5 days left to buy the shares before its ex-dividend date, 05 April 2018, in time for dividends payable on the 18 April 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Gentex can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Gentex
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share risen in the past couple of years?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How does Gentex fare?
The current trailing twelve-month payout ratio for the stock is 27.41%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect GNTX’s payout to fall to 22.11% of its earnings, which leads to a dividend yield of 1.84%. However, EPS should increase to $1.64, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. GNTX has increased its DPS from $0.21 to $0.44 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Relative to peers, Gentex has a yield of 1.91%, which is on the low-side for Auto Components stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Gentex is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three pertinent aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for GNTX’s future growth? Take a look at our free research report of analyst consensus for GNTX’s outlook.
Valuation: What is GNTX worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether GNTX is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
