Gentex (NASDAQ:GNTX) Is Paying Out A Dividend Of $0.12

Gentex Corporation's (NASDAQ:GNTX) investors are due to receive a payment of $0.12 per share on 18th of October. This means the annual payment will be 1.5% of the current stock price, which is lower than the industry average.

View our latest analysis for Gentex

Gentex's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, Gentex's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 75.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 19%, which is in the range that makes us comfortable with the sustainability of the dividend.

Gentex Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.26 in 2013 to the most recent total annual payment of $0.48. This implies that the company grew its distributions at a yearly rate of about 6.3% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Gentex May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Gentex hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Gentex's Dividend

Overall, we think Gentex is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. See if the 9 analysts are forecasting a turnaround in our free collection of analyst estimates here. 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.