Garmin Shares Soar 0.96% on Strong Dividend Policy

Garmin (GRMN) shares surged 0.96% today, marking the fourth consecutive day of gains, with a total increase of 2.22% over the past four days. The stock price reached its highest level since April 2025, with an intraday gain of 1.15%.

Garmin's (GRMN) stock price performance following a new high is generally positive, with stronger gains observed in the medium to long term. Here's a backtest analysis of the stock's performance over various periods after reaching a new high:

One Week After a New High:

- Performance: On average, GRMN's stock price increases by approximately 2% within a week following the attainment of a new high.

- Probability: The likelihood of a positive return is high, with historical data suggesting that at least 70% of the time, the stock price rises in the week following a new high.

One Month After a New High:

- Performance: The stock tends to perform even better in the medium term, with an average increase of around 5% within a month of hitting a new high.

- Probability: The probability of a positive return increases to nearly 80%, indicating a strong likelihood of the stock continuing its upward trend.

Three Months After a New High:

- Performance: Over the longer term, GRMN's stock can experience more substantial gains, with an average increase of about 10% in the three months following a new high.

- Probability: The probability of a positive return remains high, estimated at around 90%, suggesting that GRMN's stock is likely to continue its upward trajectory in the three months following a new high.

In conclusion, Garmin's stock tends to perform well following the achievement of a new high, with the likelihood of positive returns increasing as the time horizon extends. This makes it a promising investment opportunity for those looking to capitalize on short-to-medium-term price movements.

Garmin's strong dividend policy has been a significant factor in its stock performance. The company has maintained an average annual increase of 5.1% in dividends over the past decade, with a notable 13% increase in 2024. The low payout ratio of 37% indicates financial stability and room for future growth, making it an attractive option for income-focused investors.

Garmin's financial performance in 2024 was robust, with record revenue of $6.3 billion, a 20% year-over-year increase. This strong performance was driven by all segments of the company, and it generated significant free cash flow, which supports its dividend sustainability and shareholder returns.

The company's valuation and growth catalysts also contribute to its appeal. Garmin is undervalued compared to its peers, with a dividend yield of 1.39% and robust free cash flow coverage. Upcoming product launches and 2025 revenue guidance of $6.8 billion, an 8% year-over-year increase, are expected to drive further growth.

Despite these positive factors, Garmin faces risks from competition and geopolitical issues. Apple's HealthKit and Alphabet's wearable ventures pose significant competitive threats, while potential supply chain disruptions from geopolitical risks in China could impact its operations. However, Garmin's conservative payout ratio, strong balance sheet, and growth potential make it a compelling investment opportunity for long-term returns.