Income-paying automobile manufacturing stocks to consider buying this year include incumbent companies competing with Elon Musk’s trend-setting electric vehicle (EV) builder Tesla Inc. (NASDAQ:TSLA) as the industry expands rapidly beyond offering just traditional internal-combustion engine (ICE) cars and trucks.
The income-paying automobile manufacturing stocks to consider buying this year feature familiar names such as Ferrari (NYSE:RACE), Toyota (NYSE:TM), Volkswagen (OTC:VWAGY) and Honda (NYSE:HMC). General Motors (NYSE:GM) andFord (NYSE:F) currently have suspended the dividends that they usually pay but both companies typically restore the payouts after enduring cyclical downturns, such as the current one caused by COVID-19.
A wild card candidate is the newly formed Stellantis NV (NYSE:STLN), headquartered in Amsterdam, Netherlands, which debuted as the world’s fourth-largest car builder by volume on Jan. 16 upon consummation of a $52 billion merger of Fiat Chrysler Automobiles NV and French automaker Groupe PSA with European brands such as Peugeot, Citroën, Opel and Vauxhall.Stellantis zoomed 10.83% upon its Jan. 19 debut on the New York Stock Exchange as it climbed $1.65 to close at $16.88.
Income-paying Automobile Manufacturing Stocks to Consider Buying Include New One
The previous day, Stellantis began trading in Milan, Italy, where its ticker STLA replaced Fiat Chrysler’s symbol, and in Paris where it took the place of Peugeot SA. Stellantis CEO Carlos Tavares announced that the merger ultimately would add $30 billion in value for its shareholders due to planned cost savings and reductions.
Even though original-equipment manufacturers (OEMs) have not received the revved-up valuation of Tesla, 2021 could turn into an important EV launch year for the established auto makers, whereas the timeline for many EV start-ups remains 2022-23 and beyond, according to a recent research report from BoA Global Research. The disparity likely will result in a continued tug-of-war for valuation and capital from respective investors between legacy auto makers and new entrants, the report noted.
Income-paying Automobile Manufacturing Stocks to Consider May Soon Feature GM
“GM and other OEMs have been fairly quietly investing in EVs in recent years while Tesla grabbed all the headlines,” said Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. “Many investors underestimated how serious the OEMs were about EVs.”
Investments and technology advances in EV now leave the OEMs, especially General Motors, in fine shape, said Carlson, who also heads the Retirement Watch investment newsletter. Innovation is starting to allow for development of reliable, affordable and mass-produced EVs in the coming years, he added.
Detroit's General Motors and San Francisco’s Cruise announced on Jan. 19 that they have entered a long-term strategic partnership with giant software and cloud computing company Microsoft (NASDAQ:MSFT) to speed up commercialization of self-driving vehicles. The three companies plan to bring together their software and hardware engineering, cloud computing capabilities, manufacturing know-how and partner ecosystem to create safer and cleaner transportation.
Income-paying Automobile Manufacturing Stocks to Consider Buying Highlighted by BoA
Musk’s role as an avowed champion of electric vehicles not only boosts Tesla but gives a lift to its competitors. A key question is whether the current valuation of Tesla and other electric vehicle (EV) stocks is overheated compared to the stocks of conventional internal combustion-engine vehicle manufacturers.
Tesla backers should be pleased by BoA Global Research racketing up its forward estimates and price target to $900 from $500 for Tesla on Jan. 11, following rising fourth-quarter deliveries. The 80% boost in BoA’s price objective is partly due to Tesla announcing a $5 billion equity distribution agreement in December 2020 to corroborate the investment firm’s view that the EV manufacturer and lithium battery maker would use its stock to raise low-cost equity. Teslatappedthe same strategy to raise $5 billion in low-cost equity in September 2020.
When the technology developments are combined with GM’s distributorships and rich experience in production and marketing, the manufacturer has the potential to gain a strong share of the EV market as it grows, Carlson predicted.
Pension fund and Retirement Watch head Bob Carlson answers questions from Paul Dykewicz prior to COVID-19-related social distancing
Kramer Cautions Not All Income-paying to Consider Buying Will Excel in EVs
“There are too many companies around the world hoping to be the next Tesla and their efforts to capture even trivial market share will ultimately leave investors poorer,” said Hilary Kramer, who hosts the nationally aired “Millionaire Maker” radio program and heads the GameChangers and Value Authority advisory services. “While the vehicles are often great and the business models are well thought out, none really have the Elon Musk reality distortion field on their side, which is what they need to raise enough cash to reach sustainable scale before the market matures. Meanwhile everyone in the traditional auto industry is racing to their own electric models.”
Kramer’s forecast is that the winning vehicle manufacturers will become leaders in their regional markets, rather than global goliaths. For example, expect Volkswagen and Renault (OTCMKTS: RNLSY) to dominate in Europe, while Nissan (OTCMKTS:NSANY) and Toyota should lead the Japanese EV market, she added.
Income lovers will like the dividend yields of 2.64% for Volkswagen, 6.48% for Nissan and 2.80% for Toyota. Renault is among the automakers such as GM and Ford that suspended dividend payments amid the COVID-19 crisis.
“China is an open question, but if Tesla is facing more savage local competition, the next generation of western manufacturers is going to have a much harder time establishing themselves,” Kramer said.
Columnist Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services include IPO Edge, 2-Day Trader, Turbo Trader, High Octane Trader and Inner Circle
Income-paying Automobile Manufacturing Stocks to Consider Buying as Option Plays
Seasoned trader Bryan Perry recently recommended selling naked put options in GM to subscribers of his Quick Income Trader service and advised that taking profits on Jan. 19 after they rose 55.88% in less than a week. The strategy sidestepped the need to hold a short position in the underlying shares of GM. Instead, his subscribers took a long position in the stock to profit further from its ongoing climb. The result is that his recommendation of GM’s stock surged by double-digit percentages in the same period.
Paul Dykewicz interviews Bryan Perry at a MoneyShow
Click here to read the rest of the article.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.