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Income investors searching beyond traditional high-yield sectors may want to take a closer look at the auto industry.
To that point, Honda Motor (HMC - Free Report), Mazda Motor (MZDAY - Free Report), and Polaris (PII - Free Report) each offer dividend yields above 3%, while their improving growth trajectories and increasingly favorable earnings outlooks add another layer of appeal.
More importantly, all three stocks trade at forward P/E multiples under 20X and currently have favorable Zacks Rankings, reflecting positive trends in earnings estimate revisions.
Honda Motor – Stock Price: $31, Zacks Rank #1 (Strong Buy)
Honda's earnings outlook has improved dramatically following a strong start to its fiscal 2027. First-quarter revenue increased 3% to $38.03 billion, with automobile revenue rising 9.5% to $24.5 billion and the segment swung back to an operating profit of over $658 million.
The auto giant is now forecasting FY27 revenue growth of nearly 11% after posting revenue of roughly $144.65 billion in FY26.
Analysts have responded by sharply raising their earnings projections. The Zacks Consensus for FY27 EPS has climbed from $0.92 to $2.19 over the last 60 days, while FY28 EPS estimates have increased from $2.89 to $3.56.
Combined with its dividend yield above 3%, Honda's improving profitability and surging EPS revisions make HMC an appealing income-and-growth play.
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Mazda Motor – Stock Price: $3, Zacks Rank #2 (Buy)
As one of the more attractive penny stocks to consider, Mazda is also displaying an impressive operating turnaround. In August, Mazda reported that its fiscal first-quarter revenue surged 17% to a record $8.06 billion, while operating income rebounded to roughly $205 million from a year-ago loss.
For its current FY27, Mazda expects global sales volumes to rise 8%, revenue to jump 12%, and operating income to nearly triple. Management is looking for additional momentum from new models including the CX-5, Mazda6e, and CX-6e.
Encouragingly, the Zacks Consensus FY27 EPS estimate has risen from $0.46 to $0.50 over the last 60 days, with FY28 EPS estimates rising from $0.65 to $0.71. Along with its cheap stock price of under $5 a share, MZDAY has the lowest forward P/E multiple on the list at 7X.
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Polaris – Stock Price: $57, Zacks Rank #1 (Strong Buy)
Powersports manufacturer Polaris rounds out the list after delivering a massive second-quarter earnings beat in late July, posting adjusted EPS of $1.97 versus the $0.77 Zacks Consensus.
Polaris posted an EPS surprise of 155.84%, with Q2 earnings soaring 392% from $0.40 per share in the prior-year quarter.
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That performance has triggered substantial upward revisions. The Zacks Consensus for FY26 EPS has now soared from $1.83 to $3.22 over the last 60 days, while FY27 EPS estimates have climbed from $3.21 to $3.70.
Alongside what appears to be a meaningful earnings recovery, PII has the highest dividend yield on the list at 4.59%.
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Bottom Line
Honda, Mazda, and Polaris offer an attractive combination of 3%-plus dividend yields and improving earnings prospects.
Most importantly, the positive trend in EPS revisions suggests these top auto stocks have more upside, making them compelling options for investors seeking both income and growth potential.
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