Tesla, Inc. (TSLA) recently surpassed Ford Motor (F) in terms of market capitalization.
Tesla now has a market cap of $48 billion, compared with a market cap of $45 billion for Ford.
This is because, in the past five years, Tesla stock gained 755%, versus a 5% decline for Ford.
Investors that had the foresight to buy Tesla shares early on have been richly rewarded. But whether Tesla is a good investment today, is a different question.
Ford has a checkered dividend history—the company slashed its dividend during the Great Recession.
As a result, it is not a member of the Dividend Achievers, a group of 271 stocks with 10+ years of consecutive dividend increases.
You can see the full Dividend Achievers List here.
But, its consistent profitability allows Ford to reward shareholders with a current dividend yield of 5.3%, more than double the average dividend yield in the S&P 500.
Ford also distributes a special dividend each year.
This article will discuss the top three reasons why income investors looking for cheap dividend stocks, should favor Ford over Tesla.
Reason #1: Profitability
Tesla is in high-growth mode. In 2016, revenue increased 17% to $7 billion.
However, as Tesla has grown, its costs have risen in tandem. The company has posted a loss each year for the past decade.
And, its losses have accelerated in recent years.
In 2016, Tesla’s net loss narrowed to $675 million, down from $889 million in 2015. But the loss of $4.68 per share in 2016 was still a bigger loss than the company incurred in 2012-2014.
Source: Tesla SEC Filings
Tesla investors are banking on the company putting up huge growth going forward.
In time, investors envision Tesla becoming a renewable energy powerhouse, that can sell automobiles, and also power homes.
Tesla acquired SolarCity last year, for $2.8 billion.
In 2017, the company started production of battery cells for energy storage products at its Gigafactory 1 facility.
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