Stock markets have been volatile in the wake of Russia’s invasion of Ukraine and on concerns around the Fed’s tightening monetary policy to combat inflation. The Russia-Ukraine war has aggravated the current supply chain crisis due to sanctions against Russia levied by several countries. This has caused increased production costs and a shortage of semiconductors and other raw materials for the automakers.

During this period of market turbulence, we think investing in high dividend-yielding stocks could help generate a steady stream of income. Amid the increasing market volatility, dividend stocks are safer and more dependable than growth stocks. Furthermore, analysts predict a less aggressive Fed rate hike following the escalating geopolitical tensions, given the potential economic impact of the sanctions imposed against Russia.

Given the backdrop, auto manufacturing stocks Toyota Motor Corporation (TM), Ford Motor Company (F), and Honda Motor Co., Ltd. (HMC), which offer a more than 2% dividend yield, could be solid additions to one’s watchlist.

Click here to check out our Automotive Industry Report for 2022

Toyota Motor Corporation (TM)

TM designs, manufactures, markets, and sells passenger vehicles, commercial vehicles, and related parts and accessories. It is headquartered in Toyota, Japan. The company operates in three segments: Automobile; Financial Services; and the Other. TM offers hybrid cars, conventional engine vehicles, fuel cell vehicles, mini-vehicles, passenger vehicles, commercial vehicles, pickup trucks, and financial services.

In February, TM announced an investment of $90 million for two Toyota manufacturing plants in West Virginia and Tennessee to expand the production of electrified vehicles to meet growing demand. This is expected to expand TM’s production capacity and boost its revenue streams.

TM’s sales revenues from its financial services segment increased 6.7% year-over-year to ¥581.32 billion ($5.06 billion) in its fiscal year 2022 third quarter, ended December 31, 2021. TM’s other finance income grew 158.2% year-over-year to ¥136.54 billion ($1.19 billion). Its cash and cash equivalents increased 13.1% over the nine months ended Dec. 31, 2021, to come in at ¥5.77 trillion ($50.23 billion).

TM pays $4.20 in dividends annually, yielding 2.5% at its  current share price. The company’s dividends have increased at a 3.7%  rate over the past five years.

Analysts expect TM’s EPS for its  fiscal year 2022, ending March 31, 2022, to come in at $18.64, representing a 27% year-over-year rise.

The stock gained 16.3% in price over the past year. TM closed Friday’s trading session at $170.75.

TM’s POWR Ratings reflect this promising outlook. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

TM has a grade of A for Stability and a B for Sentiment. Within the Auto & Vehicle Manufacturers industry, it is ranked #22 of 69 stocks.

To see additional POWR Ratings (Momentum, Value, Growth, and Quality) for TM, click here.

Ford Motor Company (F)

F designs, manufactures, markets, and sells a range of trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. The Dearborn, Mich.-based company operates through three segments: Automotive; Mobility; and Ford Credit. It provides Ford and Lincoln service parts and accessories, mobility services, self-driving systems development services, financing and leasing services, and wholesale loans to dealers.

In January, F and ADT Inc. (ADT) formed a joint venture to provide AI-powered connected security cameras and a corresponding mobile app to strengthen the security of new and existing vehicles across automotive brands. This is expected to increase the company’s profitability.

In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, F’s revenue increased 4.7% year-over-year to $37.70 billion. The company’s adjusted EBIT rose 18.9% year-over-year to come in at $2.04 billion. Its net income attributable to Ford increased 540.5% from its  year-ago value to $12.28 billion.

F pays $0.40 in  dividends annually, yielding 2.4% at its current  share price.

The $146.01 billion consensus revenue estimate for the fiscal year 2022, ended Dec.31, 2022 represents 15.7% year-over-year growth. The $2.06 consensus EPS estimate for its fiscal year 2022 indicates 29.8% year-over-year growth. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.

Under POWR Ratings, F has a B grade for Value. Among the 69 stocks in the Auto & Vehicle Manufacturers industry, it is ranked #30.

Click here to see the additional POWR Ratings for Momentum, Sentiment, Growth, Quality, and Stability for F.

Honda Motor Co., Ltd. (HMC)

HMC develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. It is headquartered in Tokyo, Japan. The company operates through four segments: Motorcycle Business; Automobile Business; Financial Services Business; and Life Creation and Other Businesses.

HMC’s comprehensive income for the period increased 35.2% year-over-year to 425.87 billion ($3.71 billion) in its  fiscal year 2022 third quarter, ended Dec. 31, 2021. HMC’s current assets have increased marginally over the nine months ended Dec. 31, 2021, to come in at 7.59 trillion ($66.07 billion).

HMC pays $0.79 as dividends annually, yielding 2.8% on the current price.

Analysts expect HMC’s revenue for its fiscal year 2022 fourth-quarter, ending March 2022 to come in at $34.25 billion, representing a 3.3% rise year-over-year.

The stock has declined marginally year-to-date and closed yesterday’s trading session at $28.01.

HMC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to Buy in our proprietary rating system.

HMC has an A grade for Value. It has a grade of B for Quality, Sentiment, and Stability. Among the 69 stocks in the Auto & Vehicle Manufacturers industry, it is ranked #7.

Click here to see the additional POWR Ratings for Momentum and Growth for HMC.

Click here to check out our Automotive Industry Report for 2022

TM shares were trading at $161.36 per share on Monday afternoon, down $9.39 (-5.50%). Year-to-date, TM has declined -12.92%, versus a -10.69% rise in the benchmark S&P 500 index during the same period.

About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...

More Resources for the Stocks in this Article