Good Dividend Bets Among Automotive Stocks – Barron's

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Large automotive companies offer some enticing dividend yields— General Motors GM 1.4417177914110428% General Motors Co. U.S.: NYSE USD33.07 0.47 1.4417177914110428% /Date(1495832463766-0500)/ Volume (Delayed 15m) : 16639113 AFTER HOURS USD33.02 -0.05 -0.15119443604475355% Volume (Delayed 15m) : 174568 P/E Ratio 5.1191950464396285 Market Cap 49195582438.5574 Dividend Yield 4.596310855760508% Rev. per Employee 756956 More quote details and news » and Ford Motor F 0.6445672191528545% Ford Motor Co. U.S.: NYSE USD10.93 0.07 0.6445672191528545% /Date(1495832484479-0500)/ Volume (Delayed 15m) : 26980961 AFTER HOURS USD10.93 % Volume (Delayed 15m) : 1195493 P/E Ratio 11.671115856914042 Market Cap 43245974233.4287 Dividend Yield 5.489478499542543% Rev. per Employee 762328 More quote details and news » in particular—but investors need to weigh these potential investments carefully. Their payouts look safe, but don’t expect significant increases in the near term.

Ford (ticker: F), which replaced its CEO last week, has been a disappointment for stockholders. Its shares are down 15% in the past year, partly owing to concerns about how the auto maker is positioning itself in coming technologies, such as autonomous and electric vehicles.

Still, the No. 2 U.S. car maker sports a 5.5% yield, the highest among the six automotive companies in the table below. General Motors (GM) yields 4.6%, though its stock has outpaced Ford’s, returning 10.3%.

“Investors have a long memory, and they remember what difficulties auto makers had during leaner times,” says Brian Sponheimer, automotive analyst at Gabelli & Co. “Until we see a down cycle in the North American auto market, where investors can witness what these companies look like when demand and production inevitably get softer, then the stocks are unlikely to move materially higher.”

Ford last hiked its regular dividend in early 2015; GM did so in early 2016. Sponheimer doesn’t expect a significant near-term boost from either, “because it just doesn’t make any sense for companies to do so with yields where they are now.”

However, he says, both are in good financial shape, with solid cash flows and balance sheets. “As an investor, you can look at GM or Ford or other businesses in the auto industry with significantly more confidence from a dividend perspective” than a decade ago, he says. “The number of plants and factories shuttered during the 2008-10 period has changed the cost structure of these businesses.” Labor contracts, he adds, now “provide greater flexibility in the event of an inevitable cyclical change, particularly in North America.”

Genuine Parts GPC 2.1015761821366024% Genuine Parts Co. U.S.: NYSE USD93.28 1.92 2.1015761821366024% /Date(1495832521650-0500)/ Volume (Delayed 15m) : 982505 AFTER HOURS USD93.2636 -0.0164 -0.01758147512864494% Volume (Delayed 15m) : 161293 P/E Ratio 20.19047619047619 Market Cap 13465915673.4583 Dividend Yield 2.8945111492281304% Rev. per Employee 388177 More quote details and news » (GPC), which has very strong cash flow and whose largest business involves selling auto parts, many in the aftermarket, has announced that its dividend is rising by 3%, to $2.70 a share—its 61st straight annual increase. “That cash flow that Genuine Parts is able to generate not only supports the current dividend, but also future dividend growth and selective M&A,” says Sponheimer.

IN OTHER NEWS, private-label credit-card issuer Synchrony Financial SYF 0.5141388174807198% Synchrony Financial U.S.: NYSE USD27.37 0.14 0.5141388174807198% /Date(1495832429015-0500)/ Volume (Delayed 15m) : 11373895 AFTER HOURS USD27.37 % Volume (Delayed 15m) : 77787 P/E Ratio 10.446564885496183 Market Cap 22077719321.2342 Dividend Yield 1.8998903909389844% Rev. per Employee 840000 More quote details and news » (SYF) plans to hike its quarterly dividend to 15 cents a share from 13 cents. Late last week, the stock was yielding 1.9%… Cracker Barrel Old Country Store CBRL -0.6918957944768667% Cracker Barrel Old Country Store Inc. U.S.: Nasdaq USD165.06 -1.15 -0.6918957944768667% /Date(1495832400421-0500)/ Volume (Delayed 15m) : 201453 AFTER HOURS USD165.06 % Volume (Delayed 15m) : 153 P/E Ratio 19.95888754534462 Market Cap 3996187069.68566 Dividend Yield 2.9080334423845873% Rev. per Employee 40118.4 More quote details and news » (CBRL) declared a quarterly payout of $1.20 a share, a 4% increase. Yield: 2.9%. The company is also issuing a special dividend of $3.50 a share… Chubb CB -0.36424768842813116% Chubb Ltd. U.S.: NYSE USD142.24 -0.52 -0.36424768842813116% /Date(1495832602256-0500)/ Volume (Delayed 15m) : 914957 AFTER HOURS USD142.3878 0.1478 0.10390888638920134% Volume (Delayed 15m) : 65475 P/E Ratio 14.020561650451942 Market Cap 66658208692.4287 Dividend Yield 1.9966254218222723% Rev. per Employee 1042160 More quote details and news » (CB) has declared a quarterly dividend of 71 cents a share, up 3% from 69 cents. The insurer’s stock yields 2%… Southwest Airlines LUV -0.4103742613263296% Southwest Airlines Co. U.S.: NYSE USD60.67 -0.25 -0.4103742613263296% /Date(1495832416674-0500)/ Volume (Delayed 15m) : 4193060 AFTER HOURS USD60.58 -0.09 -0.14834349761002144% Volume (Delayed 15m) : 735185 P/E Ratio 18.32930513595166 Market Cap 36836070369.8797 Dividend Yield 0.8241305422778968% Rev. per Employee 382841 More quote details and news » (LUV) announced a quarterly dividend of 12.5 cents a share, up from 10 cents. Yield: 0.8%…Chemical and plastics maker LyondellBasell LYB 0.07437709185570844% LyondellBasell Industries N.V. Cl A U.S.: NYSE USD80.73 0.06 0.07437709185570844% /Date(1495832512228-0500)/ Volume (Delayed 15m) : 1802058 AFTER HOURS USD80.7 -0.03 -0.03716090672612412% Volume (Delayed 15m) : 39612 P/E Ratio 9.271743749353975 Market Cap 32494278021.5973 Dividend Yield 4.2115694289607335% Rev. per Employee 2373690 More quote details and news » Industries (LYB) is raising its quarterly payout by 6%, to 90 cents a share from 85 cents. Yield: 4.4%. 


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