Updated 3/10/25
Garmin Ltd. has been a household name in GPS navigation for years, but it has grown into much more than that. Today, the company is a leader in wearable technology, aviation electronics, marine navigation, and fitness tracking. While many investors recognize Garmin for its innovative products, long-term shareholders have also enjoyed its steady dividend payments and financial stability.
For those looking at Garmin from a dividend investment standpoint, the key question is: Does it offer both stability and growth in income over time? Let’s take a deeper dive into the company’s dividend potential and financial health.
Key Dividend Metrics
📈 Dividend Yield: 1.64% (Forward)
💰 Annual Dividend: $3.60 per share
📅 Ex-Dividend Date: March 13, 2025
🔄 Dividend Growth: 5-Year Average Yield of 2.27%
⚖️ Payout Ratio: 40.82% (Moderate)
📊 Dividend History: Consistent increases over time
Dividend Overview
Garmin isn’t known for offering an extremely high dividend yield, but what it does provide is consistency. The current yield of 1.64% is on the lower side, especially when compared to dividend-heavy sectors like utilities or REITs, but for a technology-driven company, it’s respectable.
The company maintains a payout ratio of just over 40%, meaning less than half of its earnings go toward dividends. This leaves plenty of room for reinvestment into growth while still rewarding shareholders.
One thing to note is that Garmin’s yield has come down compared to its five-year average of 2.27%. That’s not because the dividend has been cut but rather because the stock price has climbed significantly, reducing the yield percentage. While that’s great news for capital appreciation, investors focused solely on income might find the yield a bit low.
Dividend Growth and Safety
For those who prioritize growing dividend income, Garmin has been a reliable performer.
Dividend Growth Trends
- The company has a track record of steady dividend increases.
- A moderate payout ratio leaves room for future growth.
- The five-year average dividend yield of 2.27% suggests a stable commitment to returning capital to shareholders.
Is the Dividend Secure?
Dividend security isn’t an issue here. Garmin operates with strong profit margins and has minimal debt. The company maintains a profit margin of over 22%, with an operating margin above 28%. While recent earnings growth has slowed, Garmin still generates over $977 million in free cash flow—more than enough to sustain dividend payouts.
The company also carries very little debt relative to its equity, which means there’s no major financial burden that could put dividend payments at risk. Even in the event of a downturn, Garmin has a solid buffer to maintain its distributions.
Chart Analysis
Overall Trend
The price action for Garmin (GRMN) has been in a clear uptrend over the past year, with the stock making a strong move higher. The price remains above both the 50-day moving average (blue line) and the 200-day moving average (purple line), reinforcing the strength of the long-term bullish trend. There was a significant gap up around November, which suggests a strong catalyst at the time, possibly earnings or another fundamental driver.
Moving Averages
The 50-day moving average has been acting as dynamic support, with the stock bouncing off it multiple times. The 200-day moving average is steadily climbing, confirming a strong long-term uptrend. As long as the price remains above both moving averages, the overall momentum favors the bulls.
Volume Analysis
Volume spikes are visible at key points, particularly during breakouts and pullbacks. A large volume increase in November coincides with the sharp upward move, indicating strong institutional buying. More recent volume trends have been stable, though there are occasional spikes, suggesting traders are still actively engaged.
Relative Strength Index (RSI)
The RSI is currently at 48.32, which sits in a neutral zone. This suggests that the stock is neither overbought nor oversold, leaving room for movement in either direction. A previous spike in RSI during the late-year rally shows the stock briefly reached overbought conditions before cooling off.
Recent Price Action
Looking at the most recent candles, the stock has seen some consolidation near the $220 level, with some attempts to push higher but facing resistance. Wicks on recent candles suggest there is selling pressure at these levels, making it a key area to watch. At the same time, buyers are stepping in on dips, preventing any sharp breakdowns.
Support and Resistance
Key support lies around the 50-day moving average, which has acted as a buffer against deeper pullbacks. Resistance appears near $225, where previous attempts to break higher have struggled. A decisive move above this level could open the door to another leg higher, while a breakdown below the 50-day moving average could trigger a retest of lower support levels.
Analyst Ratings
📊 Upgrades:
📈 Tigress Financial – On February 26, 2025, Tigress Financial increased its price target for Garmin from $265 to $285, maintaining a strong buy rating. This reflects growing confidence in Garmin’s long-term growth, particularly in its aviation and wearables divisions, which continue to outperform expectations.
📈 JPMorgan Chase & Co. – On February 20, 2025, JPMorgan adjusted its price target from $219 to $260, keeping a neutral stance. While the firm sees upside potential, the analysts remain cautious about Garmin’s valuation after its recent stock run-up.
📊 Downgrades:
📉 Barclays – On February 20, 2025, Barclays lowered its rating, adjusting the price target from $158 to $188 while maintaining an underweight position. The downgrade reflects concerns over slowing earnings growth and potential margin pressures in a more competitive landscape.
📉 Morgan Stanley – On February 11, 2025, Morgan Stanley raised its price target slightly from $164 to $171 but kept an underweight rating. Analysts cited valuation concerns and uncertainty about future consumer demand in Garmin’s fitness and outdoor segments.
📍 Consensus Price Target:
The latest analyst assessments place Garmin’s average price target at approximately $210.80. This suggests a slightly cautious outlook, as the consensus sits below the current trading price, indicating analysts believe the stock may be fairly valued or slightly overextended in the short term.
While some analysts see Garmin’s continued expansion as a reason for optimism, others point to valuation concerns and industry competition, leading to a mixed outlook on the stock.
Earnings Report Summary
Garmin just posted its latest earnings, and the numbers are impressive. The company wrapped up the fourth quarter with record-breaking revenue, showing that demand for its products remains strong across multiple categories.
Fourth-Quarter Performance:
Revenue climbed 23% year-over-year to hit $1.82 billion, setting a new high for the quarter. Earnings per share also surged, coming in at $2.41—an increase of 40% from last year. That beat expectations and gave investors a reason to cheer.
Looking at different segments, the fitness division saw a huge 31% jump in revenue, fueled by strong sales of wearables and fitness trackers. The outdoor segment also had a great quarter, with revenue rising 29% as adventure watches and navigation gear gained popularity. Garmin’s automotive OEM business wasn’t left behind either, climbing 30%, thanks in part to solid orders from automakers like BMW.
Full-Year Highlights:
For 2024, Garmin’s total revenue reached $6.3 billion, up 20% from the previous year. Gross margins stayed healthy at 59%, showing the company is managing costs well while keeping its premium product pricing intact.
What’s Next for 2025:
Garmin is optimistic about the coming year, projecting revenue of around $6.8 billion—a solid 8% increase. The company expects earnings per share to reach $7.80, keeping pace with its upward trajectory.
On top of that, Garmin announced a plan to boost its annual dividend by 20%, raising it to $3.60 per share. That’s great news for income-focused investors who count on steady dividend growth.
How the Market Reacted:
The stock surged more than 12% after the earnings report, hitting a new all-time high. Investors clearly liked what they saw, and the company’s solid numbers helped reinforce confidence in its long-term growth story.
New Products Driving Growth:
Garmin also launched some exciting new products, including the Lilly 2 Active GPS smartwatch and the Descent X50i dive computer. These releases have been well received and are helping drive momentum in their respective markets.
Overall, the latest earnings show that Garmin is firing on all cylinders. The company continues to deliver strong results, and with demand holding up across multiple segments, it looks well-positioned for another strong year ahead.
Financial Health and Stability
When looking at dividend stocks, financial stability is just as important as yield and growth potential. Garmin stands out in this regard.
Balance Sheet Strength
- Debt levels are extremely low, with a debt-to-equity ratio of just 2.07%.
- The company has over $2.5 billion in cash, giving it a strong liquidity position.
- A current ratio of 3.54 indicates more than enough assets to cover short-term obligations.
Profitability Metrics
- Return on assets sits at 10.93%, showing effective use of company resources.
- Return on equity is a strong 19%, reflecting solid management performance.
- EBITDA is at $1.77 billion, supporting its ability to generate cash consistently.
With these figures, Garmin isn’t just paying dividends—it’s doing so from a position of financial strength. Unlike some companies that fund dividends through borrowing, Garmin generates enough free cash flow to sustain its payouts while also investing in growth.
Valuation and Stock Performance
Garmin’s stock has been on an impressive run, gaining more than 50% in the past year. That kind of appreciation naturally affects valuation metrics.
Valuation Multiples
- The trailing price-to-earnings (P/E) ratio sits at 30.05, which is on the higher end.
- Forward P/E is slightly lower at 27.78, suggesting continued earnings growth.
- The price-to-book ratio of 5.38 indicates that shares are trading at a premium to their net asset value.
These figures suggest that Garmin is not a bargain-priced stock at the moment. However, high-quality companies often trade at a premium, especially when they have strong balance sheets and reliable earnings streams.
Stock Performance
- Garmin has significantly outperformed the broader market, with a 52-week gain of over 50%.
- The stock has ranged from a low of $138.86 to a high of $246.50 over the past year.
- Moving averages suggest continued momentum, with the 50-day moving average at $216.24 and the 200-day at $188.63.
One thing to consider is that the stock’s valuation might limit near-term upside potential. If earnings growth slows further, there could be a pullback, which might provide a better entry point for investors looking for a higher yield.
Risks and Considerations
No stock is without risks, even those with strong dividend track records.
Valuation Risk
Garmin’s current valuation is on the high side. If growth expectations are not met, there’s a chance that investors could reprice the stock downward, which could lead to a temporary decline.
Earnings Growth Pressure
Although revenue has been strong, growing at nearly 23% year-over-year, earnings have not followed the same trajectory, with a 19.6% decline. If this trend continues, investors might start questioning Garmin’s ability to maintain its premium valuation.
Competitive Landscape
Garmin faces significant competition, particularly in wearables and fitness tracking, where companies like Apple and Samsung have deep pockets and aggressive innovation cycles. While Garmin has carved out a loyal customer base in aviation and marine markets, broader competition could impact some of its consumer segments.
Market Sensitivity
Despite a relatively low beta of 0.97, Garmin is still affected by broader market trends. If interest rates stay high or economic conditions soften, consumer discretionary spending could decline, affecting Garmin’s sales.
Yield Compression
With the stock price rising so quickly, the dividend yield has fallen below its historical average. Investors specifically looking for higher income might find better yield opportunities elsewhere.
Final Thoughts
Garmin has built a reputation as a financially strong company with a consistent dividend payout. It offers a unique mix of steady income, growth potential, and balance sheet strength, making it attractive for investors who want a blend of stability and capital appreciation.
The key takeaway is that Garmin’s dividend is reliable and well-supported, but its current yield is lower than it has been historically due to stock price appreciation. For those focused purely on yield, there may be better income-generating stocks available. However, for investors looking for long-term dividend growth from a financially solid company, Garmin remains an appealing option.
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