David Einhorn’s Three Favorite High Yield Dividend Stocks

General Motors Company (NYSE:GM)’s is largest automobile manufacturer in the United States. The company has a 17% market share in the United States automobile and truck market. Despite the company’s history as an American brand, General Motors now generates about 40% of its revenues internationally.

International sales are helping to drive growth for General Motors. The company is seeing especially good results from its joint venture in China. Chinese sales grew 12.1% for General Motors in fiscal 2014.

In addition to international growth, the company is also focusing on cost controls. Better cost controls will increase margins and earnings-per-share for shareholders in General Motors. Much of the company’s cost improvements are coming internationally as General Motors is restructuring operations in Russia, Thailand, and Indonesia.

The current iteration of General Motors is not the same debt-bloated company that was forced to declare bankruptcy during the Great Recession. David Einhorn has taken notice, but the rest of the market has not.

As a result, General Motors stock appears undervalued at current prices. The company is trading for a forward price-to-earnings ratio of just 7.1. The forward price-to-earnings ratio of General Motors competitors is shown below to illustrate the company is trading below its peers valuation multiples:

– Ford Motor Company (NYSE:F) – 8.1

– Honda Motor Co Ltd (ADR) (NYSE:HMC) – 9.9

– Toyota Motor Corp (ADR) (NYSE:TM) – 10.2

– Fiat Chrysler Automobiles NV (NYSE:FCAU) – 10.5

– Tesla Motors Inc (NASDAQ:TSLA) – 78.4

General Motors Company (NYSE:GM)’s high dividend yield of 4% and low forward price-to-earnings ratio should appeal to value oriented dividend investors. The company has a low payout ratio of about 40%. General Motors’s conservative payout ratio and growth potential make dividend growth likely for the company over the next several years.

Disclosure: None