Time for Another Performance Check

For some background on the idea behind the Performance Check, and the XIRR function used for the calculations, please see my first post in this series.

The series continues with a look at another dividend-paying stock from my Portfolio.  Last month was a check on REIT Realty Income (O), which followed a check on another REIT, W.P. Carey (WPC).  Well, no REIT this time.  Instead, I’ll be checking my performance of Gentex (GNTX), a stock in the Consumer Discretionary sector, and the Auto Parts industry.

I captured this brief investor overview from the company’s website… Gentex develops advanced electronic products and features for the automotive, aerospace and fire protection industries.

GNTX is probably most well known for its dimming rearview mirrors (both automatic and non-automatic) for automobiles.  Although similar technology and IP is used for selling into the aircraft and aerospace industries.

On the fire protection side, GNTX manufactures photoelectric smoke detectors and alarms, electro-chemical carbon monoxide detectors and alarms, as well as other related equipment such as bells and speakers used in fire detection systems.  This is done for both commercial and residential buildings.  Fire protection is a much smaller part of Gentex’s business.

Concerns investors have regarding GNTX include 1) cameras replacing mirrors in autos, 2) autonomous vehicles removing the need for mirrors, and 3) ride sharing reducing automobile growth.

The company was founded in 1974 and is headquartered in Zeeland, Michigan.

I don’t find GNTX in many DGI portfolios, and that’s probably due to the stock’s average yield, usually in the 1.7%-2.3% range.  Right now, the dividend yield for GNTX is below 1.7%, perhaps an indicator of the stock being a bit overvalued.  This wouldn’t be surprising considering the stock’s strong run up in price in 2019.

Now let’s check out the dividend growth for GNTX…

 

 

Dividend growth has been good since the start of their current 9-year dividend growth streak (only 9 years as a result of the dividend yield stalling in the aftermath of the Financial Crisis).  Dividend growth has been consistently in the upper single digit range, or better, over all the measurement periods.

GNTX’s most recent dividend raise percentage came up short of their past decade average, so I’ll have to see if this decline persists.

Note that GNTX is a relatively new Portfolio position (only a few years), and thus I don’t have a large amount of data/time to factor into the return calculated in this Performance Check.  Therefore, for now, large price changes can have a significant impact on my annualized return.

 

My Personal Performance for GNTX

Below is a capture of the spreadsheet I keep with my GNTX cash flows, and the calculated XIRR.  Compared to my five legacy Portfolio holdings, the table for GNTX is small, thanks to its shorter holding period and small number of transactions.

Here’s a note with regard to the possible ‘Type’ column entries: EOY Value = End Of Year Value, Dividend = a dividend that was not reinvested (a cash outflow)

The duplicate EOY Value entries at the end of each year (one negative, one positive) do not affect the cash flow, and can be thought of as boundary markers, allowing me to make the individual yearly return, and the annualized total return calculations.

 

 

My transaction history with GNTX has been fairly boring.  I made an initial purchase of 250 shares in mid 2015 at $16.98/share.  About 7 months later, after a significant dip in share price, I added another 100 shares at $13.42/share.  Since then, I’ve just been sitting back and watching… and reinvesting my dividends, of course.

My current position sits at a little over 381 shares, revealing that I’ve added over 31 shares thanks to dividend reinvestment since I began my GNTX investment.

 

The following price chart is also helpful to see.  It shows the stock price change since my initial purchase on 6/9/2015.  This year’s price appreciation has been stellar.  My Year-To-Date return for GNTX stands at 41.82%, including dividends.

 

The yield for GNTX is currently 1.63% – below my Portfolio average of 2.62%.  GNTX’s normal yield hovers close to that of the S&P 500.

GNTX currently has an above-average value weighting in my Portfolio at 2.62% – my 17th largest position (out of 46 stocks).  However, its dividend weighting is only 1.64% thanks to it relatively lower yield when compared to my other Portfolio stocks.

All GNTX dividend payments I’ve received since my position was started have been reinvested.

My current investment in GNTX is $5,591.00.  My cost basis, which includes $626.60 in reinvested dividends, is $6,217.60.

Meanwhile, the current value is $10,721.87, which reflects a potential capital gain of nearly $4,504.27 should I liquidate my entire position.  The annualized total return ends up being 16.26%, covering my initial purchase on 6/9/2015, through 11/23/2019.  I’ll take it, without question!

 

Summary

GNTX has been a very solid performer for me based on that compound annual growth rate.  Despite the average yield GNTX offers, it’s delivering good returns for my Portfolio, and thus I don’t have any inclination to replace the stock at this time.  I’ll have to monitor the trends in the automotive industry and see how those might impact GNTX’s business moving forward, but for now, there’s no change in my investment philosophy with GNTX.

I like the current size of my GNTX position and thus don’t have any plans to add more shares right now.  Besides, it appears GNTX is trading with a higher-than-normal valuation, so waiting for a pullback in price would seem prudent if I was looking to add.

Thanks to its stock price run up in 2019, GNTX raised what was a good annualized return for me coming into the year by over 7% (from 9.21% at the end of 2018 to the current 16.26%).  Outstanding!

 

Bringing the returns for my other Performance Check stocks (PG, RPM, AFL, PEP, JNJ, AL, GILD, TROW, FAST, WPC & O) up-to-date allows for the comparison below.

Note that rightmost column shows the year of my initial purchase for each stock, just to provide some detail with regard to how many years are part of the annualized return.

 

A great debut for GNTX in the above table, ranking 3rd in terms of annualized return for the Portfolio stocks I’ve reviewed thus far.

It was a mixed bag of change since my last Performance Check just one month ago.  Most stocks were little changed one way or the other.  However, Air Lease (AL) and T. Rowe Price Group (TROW) logged the largest increases, while REITs WPC and O declined the most (yet still sport nice annualized returns).

Gilead Sciences (GILD) continues to remain my poorest performer of the stocks reviewed (still by a wide margin, too).  Minus GILD, I’m quite pleased with all the calculated annualized returns of the stocks I’ve reviewed thus far.  I hope the strong overall performance of the group continues.

On deck for my next Performance Check is Qualcomm (QCOM), which ought to be fairly interesting as their stock price has been up and down many times over my holding period.

 

Are you monitoring the performance of your portfolio stocks?  If so, have you unearthed any strong winners or losers?  I looked forward to your comments!