Tech Dividend Stocks: Garmin (GRMN)
Dividend yield: 3.44%
Yes, that Garmin (GRMN). While GPS sales aren’t going like gangbusters thanks to the rise of smartphone navigation programs, this firm does much more than those suction cup-mounted gadgets for your car.
Garmin is involved in both airplane and marine navigation systems, as well as in-dash systems supplied to automakers ranging from lower-end Suzukis to luxury vehicles from Mercedes-Benz. There is also a big push into trucking and logistic GPS technology.
At the same time, GRMN is seeking out new applications for its technology that include pet location technology for lost dogs, fitness apps for runners, back-up cameras for vehicles and dash cams to help record what goes on in front of drivers to protect police or commercial drivers from liability issues.
This diverse product catalog has allowed Garmin to tack on 50% gains in the last 12 months on optimism about its future. Yes, sales have rolled back a bit in the last few quarters, and revenue is projected to be flat. But the company is looking at a 16% jump in its earnings thanks to better margin products and a $300 million stock buyback plan last year.
As for the dividends, Garmin pays 48 cents quarterly which is good for a nice 3.4% yield. That’s a hefty 73% of earnings, but earnings are indeed growing, and GRMN had about $1.3 billion in cash on the books at the end of the last quarter — enough to pay more than three years’ worth of dividends without dipping into a penny of cash flows. For dividend stocks, that’s a good place to be.
Garmin may not add another 50% from here, but many investors still are overlooking this tech stock. It has decent growth in profits ahead in 2014, and a reliable dividend with a yield that is better than many other dividend stocks on the market right now.