While automakers worldwide strive to keep their vehicles fuel efficient and affordable, there may be a shift in the type and size of the vehicle that is now most preferred by drivers around the globe. One area that has changed dramatically in terms of demand is the mid-size option. Yet, while Japanese automakers may be falling to U.S. car makers in this segment, they are continuing to pull in profits for themselves — and their investors — from other areas.
Toyota bouncing back from some troubled years
When analyzing Japanese automakers, Toyota Motor Corporation (ADR) (NYSE:TM) should be near the top of most investors’ lists. This corporation that focuses on designing, manufacturing, assembling, and selling passenger cars, minivans, and commercial vehicles brings in most of its revenue from Japan, Asia, Europe, and North America. It is also considered to be the world’s largest auto maker.
Toyota Motor Corporation (ADR) (NYSE:TM) has had its struggles over the past few years, though. In 2009 and 2010, the company amassed recalls due to a brake issue with its Prius model. Then, in 2011, the company felt the effects of both an earthquake and a tsunami.
This auto maker is expected to post a fiscal year operating profit in the range of 1.3 trillion Yen — or approximately $13.1 billion. This is very positive news for Toyota Motor Corporation (ADR) (NYSE:TM), as it will represent the first time since the recent financial crisis that the firm has surpassed the 1 trillion Yen mark.
In addition, Toyota Motor Corporation (ADR) (NYSE:TM)’s profits will also be nearly four times higher than the amount the company posted just one year prior — and an adjustment upwards of roughly 150 billion Yen from its February forecast.
Shareholders of Toyota Motor Corporation (ADR) (NYSE:TM) receive a dividend payout of $1.36 per share — equating to an annual dividend yield of 1.20%. While investor income may not be substantial, the company is expected to generate a compound growth in earnings of more than 20% for the next five years. Looking forward, this could provide investors with ample reward in terms of share price growth.
Honda is also keeping pace
Honda Motor Co Ltd (ADR) (NYSE:HMC) has also seen some growth over the past year or so. In addition to passenger vehicles, Honda is also known for its production of motorcycles and power products worldwide, as well as multi-utility vehicles. Through its retail dealers, Honda Motor Co Ltd (ADR) (NYSE:HMC) brings in additional revenue via its retail lending and leasing to customers, and by providing financing to its dealers.
Presently, Honda Motor Co Ltd (ADR) (NYSE:HMC) is planning to construct a new transmission plant in Mexico. While the cost of this facility is estimated to be in the neighborhood of $470 million, its initial capacity of 350,000 units is expected to quickly double to almost 700,000 within just a few years. The primary focus of the plant will be to build components for the Honda Motor Co Ltd (ADR) (NYSE:HMC) Fit product line — which includes the Fit hatchback and the Fit Crossover vehicle.
Honda Motor Co Ltd (ADR) (NYSE:HMC) recently announced its numbers for its fiscal fourth quarter, posting a rise in net profit of 5.80% over the same quarter one year prior. In addition, the company’s overall consolidated net sales rose by 14%, with a rise in its operating profit of 21%. In monetary figures, this equals sales of just over 12. 1 trillion Yen — up in excess of 22% overall.
Honda Motor Co Ltd (ADR) (NYSE:HMC)’s shareholders currently receive a dividend payout of $0.97 per quarter, per share, which equates to a yearly dividend yield of 2.40%. In addition to steady income, those who own the stock may also experience share price appreciation as the company expects its net sales and operating income to increase 22% and 43%, respectively in 2014.
Nissan is moving in the right direction
Nissan Motor (NASDAQOTH: NSANY)
is also turning its financials around, posting a rise in new car sales in China of 2.7% for April of 2013. This reverses a 17% fall in March. One potential catalyst for this could be that Nissan has been offering some hard-to-pass-up incentives for its new car buyers — including its scheme that guarantees a replacement vehicle in the event that a defect is discovered within 7 days of purchasing.The company has also revamped some of its dealer incentive programs in order to help increase sales.