What can be anticipated as Garmin's dividend payout for its shares in 2025?
Garmin (GRMN dropping 0.62%) has been a surprising victor in the stock market scene of 2024. The shares of the GPS device and wearable tech manufacturer have skyrocketed an impressive 60% this year, with only a few trading sessions left.
The outstanding financial performance was a shock for both investors and analysts, as Garmin exceeded expectations in both revenue and earnings growth throughout the year. The third quarter saw a 24% increase in revenue compared to the previous year. Even more impressively, the company forecasts a full-year sales growth of 17% compared to 2023.
Despite the stock's significant increase, it might be pushing away investors who prioritize dividends, as Garmin's dividend yield has decreased to 1.4%. Overlooking Garmin as a lucrative dividend investment could be a misstep.
A dividend with expansion potential
Garmin's sales and profitability growth can be attributed to several factors. The company boasts a top-tier brand and offers trusted products. Additionally, it serves niche markets, such as aviation and marine users, which provide better margins due to less competition and more complex product requirements. In fact, the company estimates that its operating profit will reach 24.0% in 2024, up from 20.9% in 2023.
Recently, Garmin boosted its quarterly dividend by approximately 3% to $0.75 per share during its shareholder meeting. This means that shareholders can earn $300 annually for every 100 shares they own.
The potential for growth in the dividend isn't limited to the current year, either. Garmin's payout ratio sits at only 37.4%, which is significantly lower than its five-year average. This leaves ample opportunity to expand the dividend.
As of the end of the third quarter, Garmin held approximately $3.5 billion in cash and marketable securities, with virtually no debt.
While it's challenging to predict whether shareholders will receive an increase in dividends in 2025 – Garmin broke its streak of annual dividend increases last year – its strong financial health places it in a strong position to do so. And the strength of its business ensures that the stock offers attractive return potential.
Investors who are focused on finance and seeking lucrative dividend investments might overlook Garmin due to its recent stock increase, but overlooking it could be a mistake. Despite the decrease in Garmin's dividend yield to 1.4%, the company's operating profit is projected to reach 24.0% in 2024, and its payout ratio is significantly lower than its five-year average, providing ample opportunity to expand the dividend.
Garmin's financial performance and potential for dividend growth can attract investors who are interested in investing money in finance, as the company serves niche markets and boasts a strong brand and profitability, with a significant cash reserve and virtually no debt.
