With a dividend that is approaching the 7% level, Ford Motor (NYSE:F) is great for income investors. And as the excitement for electric vehicles, led by Tesla (NASDAQ:TSLA) continues, investors should look at Ford first.
General Motors (NYSE:GM) tried to break into the EV market through the Volt but it failed. Now, Ford has a hotly designed Mustang SUV EV that would find success.
What are the other reasons to avoid GM stock and to pick Ford instead?
GM is doubling down on the SUV and truck market, taking a play out of Ford’s strategy book. It said that it would launch the Chevy Tahoe and Suburban as it targets the large sports utility vehicle market. GM will power these models with massive eight-cylinder gas engines.
Alternatively, consumers may pick the six-cylinder diesel model.
Since buyers are willing to pay a premium for large-format SUVs, GM’s profit margins should improve. Still, Ford’s Lincoln Navigator refresh is impressive, and so is its Ford Expedition update. If both companies earn a healthy profit margin from these models, then both stocks are worth owning.
Value investors may want to pick Ford stock over GM, given its higher dividend and ambitious MACH-E EV release schedule give it an edge.
Conversely, GM’s quality is still questionable and could lose out to consumers choosing a Ford instead.
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