Today, electronics maker Garmin Ltd. (GRMN) provides a wide range of potential consumers with wearable technology. The portfolio of the business contains options for tourists, fans of a balanced lifestyle and extreme sports. This helps Garmin to produce stable cash flow which is necessary to pay dividends.
Four key categories produce about 90% of Garmin’s revenue; those include outdoor sports, air travel, sea travel and safe lifestyle products. The fitness segment increased by 22 percent year-on-year, outdoor recreation-by 13 percent year-on-year, maritime transport and aviation grew by 15 percent and 22 percent respectively. Each of these segments provided double-digit growth.
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There is reason to believe that the growth of Garmin is going to continue. The strategy of acquiring regional dealers and investing in new technology are the drivers of growth. Many dealers in Europe, South America and South Africa have already been acquired by the company. Under the corporate umbrella, recruiting distributors helps strengthen sales in these markets and ensure productivity and cost savings. Also prior to the outbreak of the pandemic, this approach was successful and is likely to support Garmin in the future.
During the coronavirus pandemic, Garmin was also one of the beneficiaries of shifting travel habits of Americans. The inability to go to resorts has increased the demand for family travel in motor homes, boats, bicycles, etc. Garmin recently introduced the RV 890 Navigator, specifically built for the camping lifestyle due to the demands of the market.
Garmin generated twice the free cash flow needed to cover its quarterly dividend in the third quarter, which currently generates around 2 percent annually. With cash and liquid securities and zero debt, Garmin finished its third quarter with around $2.7 billion.
The business of Garmin remains solid, and trends in operation support the outlook of the group. Garmin Ltd’s (GRMN) stock was worth $121.30 at close of the session on Monday.