4 Automakers Deliver Rising Dividends and 15%-Plus Capital Appreciation
By: Ned Piplovic,
Four major automakers awarded their shareholders increased annual dividends and an average 25% capital gain in 2016.
Toyota Motor Corporation, Honda Motor Co., Ltd., Ford Motor Company and General Motors Co. managed to offer their customers new technologies and new features while still providing their investors with increased dividend income and capital appreciation. Ford and GM offer the highest dividend yield of 4.8% and 4.1%, respectively.
Meanwhile, Takata Corporation (TYO:7312) had to recall almost 70 million defective air bags and the Volkswagen Group (FWB:VOW) is currently under investigation for manipulating emission tests on their vehicles equipped with diesel engines. The auto industry typically is cyclical but Takata and Volkswagen are facing challenges as their competitors are profiting and rewarding their shareholders.
Toyota Motor Corporation (NYSE:TM)
After a decades-long uptrend, Toyota’s share price was cut in half over 18 months following its 2007-2008 recall for sudden unintended acceleration on some of their vehicles. After four years of marginal movement, its share price increased back up to previous levels and reached a new all-time high in the first quarter of 2015.
More recently, the company’s stock lost 20% of its value between January 2016 and the 52-week low of $ 97.80 in April 2016. However, by December 13, 2016, its share price regained 26% and reached a new 52-week high of $123.18. As of January 13, 2017, the company’s most recent closing price is only 2.7% lower than its December high.
The company’s total dividend payout in 2016 of $3.787 is 24% higher than the 2015 payout and it translates to a 3.4% dividend yield.
Toyota pays varying dividend amounts twice per year. Following a seven-year rising dividend streak, Toyota cut its dividend payouts in 2009 and again in 2010. However, the company resumed the rising dividends program in 2011 and has increased its annual dividend every year since. Indeed, 2016 marked the sixth consecutive year of dividend increases.
Honda Motor Co., Ltd. (NYSE:HMC)
Honda’s quarterly dividend payouts translated to its $0.8433 annual dividend per share in 2016. The annual yield for 2016 is 2.8%, which is 9% higher than the 2015 annual payout. Over the last 20 years, Honda failed to increase the annual dividend only four times. The company’s share price increased 123% over the same 20-year period.
In 2016, Honda’s share price declined 20% between January and the 52-week low in early July. After the July low, its share price gained almost 30% in just two months and reached the 52-week high by September 7, 2016.
Since September, its share price fluctuated considerably and dropped as low as 10% below the 52-week high. However, as of January 13, 2016, the most recent closing price was $30.08 — just 3.5% below the September high.
Ford Motor Company (NYSE:F)
Ford Motor Company paid the same regular quarterly dividend of $0.15 for the past two years. However, the additional, special dividend of $0.25, paid in January 2016, made the 2016 total annual dividend of $0.85 almost 42% higher than the 2015 annual payout.
Ford reduced its dividend payout most recently in 2012. Since then, the company’s annual dividend increased every year. Its current dividend yield of 4.8% is almost 30% higher than the 3.7% five-year average.
Ford’s share price fluctuated between $11.02 and $14.22 during the past 52 weeks. The price rose almost 30% from the low in February to the 52-week high at the end of April. Subsequently, its share price declined 15% by the end of June and then rose back up in less than a month to near-peak level by the end of July.
By early November, its price was down again to within 3% of the 52-week low. Since then, Ford’s share price recovered some of the loss and it currently is 11% lower than its 52-week high from April 2016.
General Motors Co. (NYSE:GM)
General Motors (GM) still carries debt from its 2009 Chapter 11 bankruptcy restructuring. However, as part of the restructuring, GM can carry forward more than $45 billion of losses through 2030 to offset against future taxes, which could help the company’s earnings going forward.
On January 10, 2017, GM announced its 2017 earnings outlook of $6.00-$6.50 per share, which is $0.50 higher than the outlook for 2016. GM’s CEO Mary Barra announced a $1 billion increase to GM’s cost efficiency target and the authorization of an additional $5 billion for share repurchase. GM will present its 2016 fourth-quarter business results at a conference call scheduled for Tuesday, February 7, 2017.
Since the restructuring, GM’s share price experienced a lot of volatility. Its share-price low dipped below $20 in July 2012 and topped $40 in December 2013.
However, after more fluctuations throughout 2014 and 2015, its share price performed well over the past 52 weeks. Since the 52-week low of $26.69 in February 2016, its share price rose steadily and increased 43% by January 2017. GM’s share price reached its 52-week high on January 10, 2017. At $37.34, the most recent closing price from January 13, 2017 is only 2.1% lower than its 52-week high share price and 40% higher than its low in February 2016.
The restructured company resumed paying dividends in 2014. Its dividend payout increased by double-digit percentages each year over the last two years. GM’s current quarterly dividend payout of $0.38 is equivalent to a $1.52 annual dividend and a 4.1% dividend yield.
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