MEI Stock: Big Yield with Bounce-Back Potential
April 10, 2025
Methode Electronics’ Stock May Be Down…But It’s Not Out
Lately, President Donald Trump has been busy slapping tariffs on countries left and right. And investors are freaking out. No one really knows how this will all play out because the details are about as clear as mud. So, naturally, investors are panicking—dumping the stocks of companies that might get caught in the crossfires in this global tariff war.
But here’s the thing: uncertainty and volatility aren’t new. We’ve seen this movie before. Markets overreact, things settle down, and investors who keep calm and focus on fundamentals tend to reap the biggest rewards.
One sector in particular that’s taking a beating right now?
Industrials. Investors are convinced these companies will be the biggest casualties. But remember, when fear takes over, quality stocks go on sale.
Methode Electronics Inc (NYSE:MEI) might be a prime example of a quality stock selling for a decent price. The tariff panic has caused immense selling in MEI stock—it’s down more than 40% in just a month. But, in my opinion, the stock may be down, but it’s far from out. This sell-off has turned MEI stock into a solid income play that’s worth watching.
What Does Methode Electronics Do?
Headquartered in Chicago, Illinois, Methode Electronics is designer and manufacturer of mechatronic solutions, specializing in electronic and electro-mechanical products. The company operates in four key segments: automotive, industrial, interface, and medical.
Methode supplies integrated center consoles, hidden switches, transmission lead-frames, and advanced sensors to major automakers. The company’s technology spans magneto-elastic sensing, eddy current detection, and LED-based lighting solutions to enhance vehicle performance and safety.
Beyond automotive, Methode develops industrial lighting, radio remote controls, braided cables, high-voltage connectors, and power cabling systems used across the aerospace, data-center, military, and telecommunications industries, among others.
Within the data center and broadband space, Methode Electronics provides high-speed digital communication solutions, including copper transceivers and distribution point units.
Lastly, within the consumer appliances segment, the company offers touch-panel interface solutions powered by solid-state, field-effect technology. (Source: “Profile,” Yahoo! Finance, last accessed April 3, 2025.)
Methode Electronics’ Financials: Light at the End of the Tunnel
Methode Electronics’ headline financial performance is horrendous, to say the least.
Its net sales were $239.9 million for the third quarter of fiscal year 2025 ended on February 1, compared to $259.5 million in the same quarter of fiscal 2024. The company’s net loss was $14.4 million, or $0.41 per diluted share, compared to $11.6 million, or $0.33 per diluted share, in the same period a year ago.
Looking at the headline figures, it makes sense why MEI stock has underperformed. But we still need to look into the details.
Methode Electronics’ net cash provided by operating activities was $28.1 million for the quarter. In the same quarter a year ago, it reported $28.8 million cash from operating activities. Its free cash flow was $19.6 million for the third quarter of fiscal 2025 versus $12.2 million in the same period a year ago.
The company’s outlook is decent, too.
Jon DeGaynor, the president and chief executive officer of Methode Electronics, had this to say regarding what’s ahead: “We continue to navigate the complexities of launching 53 new programs in a two-year time span, of which 20 already successfully launched this fiscal year and 33 more are expected to launch in the next five quarters. We also continue to take actions to control costs and instill a culture of acutely focusing on fundamental operating metrics. Lastly, we have taken decisive action to rebuild the executive team, which now has five new, seasoned and highly experienced leaders hired from the outside since the first quarter.”
DeGaynor ended by saying, “While the market risks in automotive and EV persist, our current forecast based on customer and other third-party sources gives us the confidence to reaffirm our guidance for profitable organic sales growth in fiscal 2026.” (Source: “Methode Electronics, Inc. Reports Fiscal 2025 Third Quarter Financial Results,” Methode Electronics Inc, March 5, 2025.)
MEI Stock Pays Dividends Like Clockwork
Looking at the MEI stock dividends, it wouldn’t be wrong to say that shareholders get paid like clockwork, at the very least.
This company has a very long history of rewarding MEI stockholders. It paid its first quarterly dividend of $0.01 in 1989. Since then, Methode hasn’t missed a payment—it paid dividends throughout the Great Recession of 2007-2009, and even during the 2020 health crisis when many companies were cutting their dividends.
The best part is that, over the years, MEI stock’s dividends have grown significantly. Currently, MEI stock pays a quarterly dividend of $0.14 per share, amounting to $0.56 per share on annual basis, for a dividend yield of 9.0%. The five-year average dividend yield for MEI stock is 1.58%.
Put simply, shareholders are getting a great deal on dividends with MEI stock.
Are these dividends safe?
Well, if you look at Methode’s track record of dividend payments throughout the years, it’ll tell you that MEI stock could continue to provide that income going forward as well. But there’s more. Methode Electronics is good at generating cash flow, which is where the dividends come from.
Chart courtesy of StockCharts.com
The Lowdown on MEI Stock
MEI stock is down, but not out. Investors could be panicking for all the wrong reasons here, but those who can be patient could be paid well going forward in the form of capital appreciation and a high-yield dividend.
Remember: in times of panic, even fundamentally strong companies go on sale. This is because investors just want to sell and get out. Those who are smart could scoop up solid companies at a great discount, and MEI stock could be one of those opportunities.
Maybe this is why so many institutional investors like this company. As per the most recent data, over 95% of the outstanding shares are held by institutional investors. Three of the biggest investors are FMR LLC, BlackRock, Inc. and The Vanguard Group. (Source: “Holders,” Yahoo! Finance, last accessed April 3, 2025.)
