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Automotive Companies Continue Accelerating Dividends

January 27, 2014 | About:
Monica Wolfe

Monica Wolfe

127 followers

Over the past month there have been three major companies directly related to the automotive industry.  Over the past couple of weeks the companies Ford Motor (F), General Motors (GM) and Delphi Automotive (DLPH)) all increased their dividends.

Ford Motor Company (F)

Ford was the first big automotive company to deliver a dividend over the past month.  On Jan. 9, Ford declared a first quarter 2014 dividend of $0.125 per share on the company’s outstanding Class B and common stock. This is a 25% increase from each of the dividends paid in each quarter of 2013.

Some of the highlights Ford noted along side with this dividend hike:

  • The dividend will be 12.5 cents per share, up from the 2013 dividend of 10 cents per share.
  • Strong balance sheet, increased liquidity and positive business performance enable increase.
  • Ford continues to target a regular, growing dividend that will be sustainable.

Ford’s dividend per share history:

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Ford’s dividend yield history:

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Ford is a producer of cars and trucks. It and its subsidiaries also engage in other businesses, including financing vehicles. The Company operates in two sectors: Automotive and Financial Services.

Ford’s historical revenue and net income:

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The analysis on Ford reports that the company’s revenue has been in decline over the past five years, it has issued $1.8 billion of debt over the past three years and its dividend yield is near a 5-year high.

The company will release its preliminary 2013 fourth quarter and full year results tomorrow, Jan. 28, before market open.

The Peter Lynch Chart suggests that the company is currently undervalued:

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Ford Motor has a market cap of $61.32 billion.  Its shares are currently trading at around $15.83 with a P/E ratio of 11.20, a P/S ratio of 0.44 and a P/B ratio of 3.08.  The dividend yield for Ford Motors is currently sitting at around 2.53%. 

General Motors (GM)

On Jan. 14, General Motors declared a dividend of $0.30 per share on its common stock.  The dividend is payable March 28, to shareholders of the record as of March 18.  This quarterly dividend will cost GM about $1.67 billion a year and ups its dividend yield to 3.1%. 

The company has been under fire from its bigger investors to return a part of the roughly $30 million in cash it has accumulated since exiting bankruptcy.  In December the U.S. Treasury sold off the last of its position in GM that it had acquired in its attempt to save the motor company in 2008.

The company’s former CEO Daniel Akerson, who retired last Wednesday, reported that “Today’s General Motors is designing high-quality, world-class vehicles for our customers and delivering consistently solid financial results.”

General Motors Company designs, builds and sell cars, trucks and automobile parts. The company also provides automotive financing services through General Motors Financial Company Inc.

General Motors’ historical revenue and net income:

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As of Sept. 30, General Motors had maintained its profitability for 15 straight quarters, in which it accumulated $16.3 billion in adjusted free cash flow. 

According to Sterne Age analyst Michael Ward “GM is the global leader in sales, and Ford was the global market-share winner in 2013.”  He also believes that together GM and Ford “should approach $25 billion in 2014 and $30 billion in 2015.” 

The company also recently named Chuck Stevens as GM’s Executive VP and CFO effective on Jan. 15.  Along with the CFO change, General Motors’ CEO Dan Akerson announced that he would be retiring from the company in January, he has been replaced by Mary Barra who was formerly the Executive VP of Global Product Development and Purchasing and Supply Chain.  Barra is the now the first female CEO of a major auto maker.

The Peter Lynch Chart suggests that the company is currently undervalued:

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General Motors Company has a market cap of $50.64 billion.  Its shares are currently trading at around $36.46 with a P/E ratio of 11.80, a P/S ratio of 0.40 and a P/B ratio of 1.80. 

Delphi Automotive (DLPH)

Also on Jan. 14, the automotive company Delphi increased its announced that it increased its quarterly common dividend 47% to $0.25 per share, representing a jump from its last quarterly dividend which was $0.17 per share. This transaction will add an additional $98 million in payouts for investors. 

Along with their dividend increase, Delphi also announced that it had authorized a new share repurchase program of up to $1 billion of its outstanding ordinary shares. 

In regards to these two transactions President and CEO Rodney O’Neal said:  “The strength of our balance sheet and free cash flow generation allows us to take these positive shareholder actions today, while maintaining our focus on driving growth and executing our strategy.”

Delphi’s dividend per share history:

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Delphi Automotive PLC is a global supplier of technologies for the automotive and commercial vehicle markets.  Delphi operates major technical centers, manufacturing sites and customer support services in 32 countries. 

Delphi Automotive’s historical revenue and net income:

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Delphi filed for Chapter 11 bankruptcy in 2005, recovered in 2009 and reorganized itself in the United Kingdom where it completed its IPO in November 2011.  The company declared its first dividend last February, and this most recent dividend represents the first payout hike the company has made thus far.  As of this most recent increase, Delphi maintains a modest 1.6% dividend yield.

The analysis on Delphi reports that the company’s dividend yield is at a 1-year high, its price is near a 3-year high and its P/S ratio is also at a 3-year high.

The company is set to release its fourth quarter results on Feb. 2, 2014 at 9:00 a.m. (ET). 

The Peter Lynch Chart suggests that the company is currently overvalued:

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Delphi Automotive PLC has a market cap of $18.45 billion.  Its shares are currently trading at around $59.96 per share with a P/E ratio of 17.90, a P/S ratio of 1.20 and a P/B ratio of 6.70. 

To view a complete list of high yielding dividend stocks found among the gurus’ portfolios, click here.

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