Garmin Offers A Safe 4 6% Yield Garmin Ltd (NASDAQ GRMN) Seeking Alpha — Volkswagen 2017

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Volkswagen 2017

Garmin Offers A Safe Yield

Usually technology don’t pay high-dividend yields, as the to invest in future growth management’s reluctant to distribute to shareholders. Therefore, these generally have strong sheets but below-average dividend Garmin (GRMN ) is one exception, both a safe and high-dividend of about 4.6%. Moreover, to many dividend stocks the is trading at relatively low valuation at only 15x its forward earnings, it a compelling income investment on attractive yield and valuation.


Background

Garmin offers positioning systems [GPS] being a global leader in GPS The company was founded in 1989 a goal to be a leading supplier of devices globally. Currently, is the leading provider of global satellite navigation systems in a variety of products, that are through a network of global system satellites. The company is a traded company since on the Nasdaq, and has a market capitalization of billion. The company operates in segments: Automobile/Mobile; Outdoor; Marine; and Aviation.

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As shown in the graphic, Auto/Mobile is the largest representing more than of Garmin’s sales but only 36% of its income. The company remains the personal navigation device leader, experiencing market gains globally, despite a industry. The PND industry has been in since 2008 with the expected to continue in 2013. has a global market share 40%, and Swedish market firm Berg Insight that the three vendors TomTom (OTCPK:TMOAY ) and MiTAC together 73% market share It also estimated that 28 PNDs were sold in 2012 against 33 million the year, a 15 percent decline. the firm forecasts that market will decline to 17 million units in 2017. The for automobile and PNDs has declined of the free mapping functions in and factory-installed vehicle systems.

In 2012. Garmin achieved billion in revenues, a decrease of from the previous year. The segment was the major reason for the given that its revenues 6% to $1.49 billion. In its remaining the company achieved good rates with the exception of The non-PND market is growing, and continue its rise in 2013 the company expecting revenues to between 5% and 10%. The company’s is very good, taking account that Garmin’s net was $542 million in the past or a 20% profit margin. Its earnings-per-share 3.4% to $2.76 due to Garmin’s segments enjoying higher than Auto/Mobile, more offsetting the decline in revenues at the level.

In the first six months of 2013, had almost $1.3 billion in representing a 4% decline from the period in 2012. Traditional of outdoor, fitness, aviation and delivered 51% of total revenues in the quarter and rose 8% over the quarter. It also announced the of its relationships with car makers (OTCQX:VLKAY ) and Mini (OTCPK:BAMXY ), should help to stabilize its in the Automobile segment over the quarters. Over the long the company remains focused in as the primary source of revenues and growth.

Dividends

Volkswagen 2017

Regarding its at the annual meeting in June, shareholders approved a cash in the amount of $1.80 per share, on a quarterly basis at a rate of per share. This dividend continue through March 31, and Garmin expects to pay a quarterly for the foreseeable future. Additionally, has a $300 million share programme ongoing through the end of

Its dividend payout ratio was 65% in the past year, which is given the company’s strong and relatively stable business. payout ratio seems given the company’s guidance of to $2.40 for 2013 EPS, and the company some flexibility to growth. Moreover, given its prospects outside Auto/Mobile it has to increase the payout ratio and a higher dividend to shareholders.

the company’s dividend is also by its strong balance sheet. has zero debt, and is increasing its hoard. At the end of the second quarter, it had and marketable securities of $2.7 Moreover, the company’s cash generation capacity is also good, given that it $186 million of free flow just in the second of 2013 and completely funded its dividend of $88 million and share activity of $13 million.

Conclusion

Despite the headwinds faces in the PND market, its other continue to achieve strong and should lead Garmin to or growing earnings over the few years. Its dividend yield is attractive at 4.6%, being by the company’s strong balance and very good cash generation capacity. Moreover, to many dividend stocks appears to be fairly valued, it a compelling investment for income

Disclosure: I have no positions in any mentioned, and no plans to initiate any within the next 72 hours. I this article myself, and it my own opinions. I am not receiving compensation for it than from Seeking I have no business relationship any company whose stock is in this article. (More. )

Volkswagen 2017
Volkswagen 2017
Volkswagen 2017

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