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Gentex Corporation (NASDAQ:GNTX) will pay a dividend of $0.12 on the 23rd of April. This means that the annual payment will be 2.0% of the current stock price, which is in line with the average for the industry.
Gentex's Projected Earnings Seem Likely To Cover Future Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Gentex's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS is forecast to expand by 41.4%. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.
View our latest analysis for Gentex
Gentex Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from $0.32 total annually to $0.48. This means that it has been growing its distributions at 4.1% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
Gentex May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Although it's important to note that Gentex's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. If Gentex is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
We Really Like Gentex's Dividend
Overall, we like to see the dividend staying consistent, and we think Gentex might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 11 Gentex analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.