Gentex's (NASDAQ:GNTX) Dividend Will Be $0.12

Gentex Corporation (NASDAQ:GNTX) has announced that it will pay a dividend of $0.12 per share on the 21st of January. This payment means that the dividend yield will be 2.0%, which is around the industry average.

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Gentex's Payment Could Potentially Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Gentex's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 64.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 18%, which is in the range that makes us comfortable with the sustainability of the dividend.

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. The annual payment during the last 10 years was $0.32 in 2015, and the most recent fiscal year payment was $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

We Could See Gentex's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Gentex has impressed us by growing EPS at 6.9% per year over the past five years. Gentex definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Gentex's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 7 analysts we track are forecasting for Gentex for free with public analyst estimates for the company. Is Gentex not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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