Guest post by ValueWalk
Shares of electric vehicle companies continue to rip on the back of rising production, lower costs, and overall better-performing financial indicators despite macroeconomic challenges.
Legacy automakers have jumped at the opportunity to electrify their car line-ups, as EV-focused makers like Tesla (TSLA), Lucid Group (LCID), and Chinese manufacturer NIO (NIO) bet on the future potential of electric vehicles.
Income investors looking for exposure to EV stocks could find opportunities in the stocks listed below. Two of the stocks in this article are members of the exclusive Dividend Aristocrats list, a group of companies that have raised their dividends for at least 25 years in a row.
You can see the full list of all 68 Dividend Aristocrats here.
We created a full list of all Dividend Aristocrats, along with important financial metrics like price-to-earnings ratios and dividend yields. You can download your copy of the Dividend Aristocrats list by clicking on the link below:
This article will provide an overview of the top EV stocks for dividend investors today.
Overview of the Global EV Market
Elsewhere, VinFast, an up-and-coming Vietnamese electric car maker, has announced that it is looking to take the company public in the coming months through a SPAC listing. The new deal would give the company an equity value of more than $23 billion.
A recent report showed that EV adoption in Vietnam is expected to grow by 13.6% this year, up from the recorded 2.9% last year. VinFast is still somewhat unknown outside of its home country Vietnam. However, the company recently broke ground in North Carolina, as it hopes to be a direct competitor with other domestic automakers.
As the pace of electrification accelerates, automakers have set out ambitious EV targets that they look to achieve within this decade.
With competition heating up, investors continue to steadily increase their portfolio share of EV stocks that provide them with opportunistic growth, and attractive dividend yields.
EV Stock: General Motors (GM)
General Motors (GM) have been pulling out all the stops, as it accelerates its electric vehicle lineup with several high-stakes investment deals.
The company announced that along with LG Energy Solution, it plans to invest more than $7 billion in a battery manufacturing plant for EV pickups in Lansing and Orion Township, Michigan.
Another part of their strategy to increase spending and manufacturing on EV components is the investment of close to $1 billion to develop and build a new V8 engine, and other critical EV components.
This is all part of the company’s plan to increase its EV production over the next several years and to further establish itself as the dominant producer and supplier of eclectic cars in the American market.
Based on current estimates, GM shares provide a 1% dividend yield and a further 5.18 pay-to-earnings ratio (P/E). General Motors finds itself in a comfortable position to capture a sizable portion of the EV auto market in the next several years, as it heavily invests in the future potential of battery-operated vehicles.
EV Stock: Volkswagen (VWAGY)
The German multinational legacy automaker, Volkswagen Group remains a consistent stock option for value investors that want to take advantage of a 6.14% dividend yield.
The company has seen increasing demand for all-electric vehicles, as deliveries rose by 50% last quarter. This represents a 7.4% share of total vehicle deliveries for the automaker.
Furthermore, revenue growth has remained strong, during H1 2023, the company posted revenue growth of 18%, as sales of new vehicles in Europe and North America continue to be favorable market segments.
The company is looking to further increase its position as a top EV supplier in the European market. Volkswagen has already significantly increased delivery of battery-electric vehicles (BEVs) by as much as 68% following recent financial postings.
The company has set out a goal of 1.65 million deliveries for the year, however, delivery times, and slowing progress at manufacturing plants, including supply chain constraints could be potential headwinds for the legacy automaker.
EV Stock: Albemarle Corporation (ALB)
Shares of the global chemical manufacturing company, Albemarle Corporation (ALB) are trading nearly 39% below its recorded peak from November 2022.
Unfortunately, due to higher interest rates, inflation, and supply chain constraints, the company has seen share prices cool down in recent months, as it looks to regain its footing as a major lithium supplier for car battery makers.
Related: Lithium Stocks List
Following its recent Q2 2023 earnings call, the company posted a 60% year-over-year increase in revenue. The company further reported a 114% increase in adjusted net income for the same recorded period.
Initially, investors weren’t optimistic, however, recent financial indications showed that the company has seen sales volume soar over the quarter, as demand for battery components, including lithium continues to rise on the back of growing EV manufacturing.
Per their recent report, earnings per share EPS increased by 60%, from $3.46 per share to $5.52 per share. Adjusted EPS was up nearly double, by 112%, climbing from $3.45 per share to $7.33 per share.
ALB dividend yield is 0.81%. There’s a positive upside to Albemarle, as it’s not directly involved with the production and manufacturing of EVs, and is rather a supplier of critical components.
ALB has increased its dividend for over 25 years, making it a Dividend Aristocrat.
EV Stock: NextEra Energy (NEE)
NextEra Energy has been on top of investors’ radars, as it’s seen continuous improvement in revenue and net income for the last several years. Like ALB, NEE is on the Dividend Aristocrats list.
Based on their recent Q2 2023 financial report, revenue increased by 41.79%, while net income soared by 102.54%. This performance is based on quarter-over-quarter growth. Furthermore, the company announced that Q2 2023 adjusted earnings were $0.88 per share, compared to $0.81 per share for the same quarter of 2022.
Overall, the company has seen strong, and persistent growth during Q1 and Q2 2023, providing investors with a positive long-term upside.
NextEra Energy is considered to be one of the biggest providers of battery storage, and in more recent times, has become a critical link in the EV supply chain, both for motorists and EV manufacturers.
Currently, NEE shares have a strong, and seemingly attractive dividend yield of 2.7%.
Now could perhaps be a good time for investors to consider their holding of NEE shares, as the company could experience further upside growth in the coming years, as demand for both electric vehicles and renewable energy witnesses strong investment support and growth.
EV Stock: BYD Company (BYDDY)
Investors who have been following the development of the Shenzhen-based electric vehicle manufacturer BYD Company (OTCMKTS: BYDDY), might’ve noticed the rate at which the company is looking to bring reliable and affordable EV models to the European market in recent years.
In a recent announcement, the company said that it delivered roughly 262,161 new units in July, an increase of 3.6% from the month before. The recent production figures are another record for the company, and the third consecutive month BYD has witnessed increased production.
Geopolitical tension between China and the U.S. have made it difficult for the company to enter the American marketplace, however, in their domestic homeland, China, and in Europe, BYD is finding a greater opportunity to establish itself as a global EV maker.
Share prices of BYD have soared by 34% to date, and have climbed more than 37% in March after share prices fell to roughly $50.00 per share. At the end of July BYDDY climbed to a high of $71.35 per share, before slipping down to $68.55 per share.
BYDDY pays an annual dividend which yields 0.4%. Both EPS and diluted EPS were posted at 0.28% (CNY), according to the company’s Q1 2022 earnings report.
More recently, there have been questions regarding the company’s decision to shelve its $1 billion investment deal in India, following a report by Reuters, that the company’s investment deal has come under scrutiny by officials in New Delhi.
Looking at the long-term, BYDDY is perhaps considered a strong dividend stock choice for investors that are looking to lower their risk exposure, but further increase the presence of international names in their portfolio.
Final Thoughts
Buying EV stocks for dividends continues to present investors with some positive returns; however, the sector is not without its persistent risks and volatility.
Overall, higher inflation and supply chain constraints could lead legacy automakers, component suppliers, and manufacturers to increase their offerings, passing through costs to consumers. Labor shortages could be another factor that drives up costs, and lowers production, including of new EVs.
Political tension between key consumer markets, the U.S. and China, could drive a wedge between suppliers and manufacturers, which could potentially create near-term shortages of critical components and parts.
There’s growing potential for EV companies, whether these are battery manufacturers, materials suppliers, or energy solutions companies. Overall, investors should diversify their EV holdings, as to take increased advantage of the ongoing electric vehicle boom.
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