Garmin (NYSE:GRMN) Is Increasing Its Dividend To $0.90

Garmin Ltd. (NYSE:GRMN) will increase its dividend from last year's comparable payment on the 27th of June to $0.90. Based on this payment, the dividend yield for the company will be 1.4%, which is fairly typical for the industry.

Garmin's Payment Could Potentially Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, Garmin was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 31.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.

See our latest analysis for Garmin

Garmin Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.92 in 2015, and the most recent fiscal year payment was $3.00. This implies that the company grew its distributions at a yearly rate of about 4.6% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

We Could See Garmin's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Garmin has impressed us by growing EPS at 7.9% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Garmin's Dividend

Overall, a dividend increase is always good, and we think that Garmin is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. For instance, we've picked out 1 warning sign for Garmin that investors should take into consideration. 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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