Honda Motor Co Ltd, known by the ticker symbol HMC, is a Large cap Auto Manufacturer in the consumer cyclical business sector. This is my first report on HMC for my Viital stock portfolio. I last reviewed HMC on August 23rd for my Vista portfolio (my sixth).

Honda Motor Co was originally a motorcycle manufacturer. Today, the firm makes automobiles, motorcycles, and power products such as boat engines, generators, and lawnmowers. Honda sold 19.7 million cars and motorcycles in fiscal 2021 (4.5 million of which were autos), and consolidated sales were JPY 13.2 trillion. 

Photo by Tim Mossholder on Unsplash

The company operates through four segments: (1) Motorcycle Business, (2) Automobile Business, (3) Financial Services Business, and (4) Life creation and Other Businesses.

Automobiles constitute 65% of revenue and motorcycles 14%, with the rest split between power products and financial services. Honda also makes robots and private jets.

The company also sells spare parts; and provides after-sale services through retail dealers directly, as well as through independent distributors and licensees. 

Honda Motor Co., Ltd. was founded in 1946 and is headquartered in Tokyo, Japan.

Three key data points gauge any dividend equity or fund such as Honda Motor Co Ltd (HMC):

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money. 

HMC Price

Honda's price per share was $29.04 as of yesterday's market close. One year ago its price was $28.78. Thus, HMC's share price rose a little under 1% in the past year.

If Honda's stock trades in the range of $25.00 to $40.00 this next year, its recent $29.04 share price could rise by $596 to reach $35.00 by November 24, 2022. My estimate is $2.34 below the median of the three analyst estimates who cover Honda Motor Co Ltd for brokerages.

HMC Dividends

Honda's most recently announced semi-annual dividend of  $0.49 will pay out December 8th to shareholders of record September 28th. The compounded annual payout of $0.98 yields 3.37% per yesterday's $29.04 closing price. 

Honda Motor Co Ltd has paid variable quarterly and now semi-annual dividends since June 1985. That is 36 years of variable payouts. 

HMC Returns

Adding the $0.98 annual estimated HMC forward-looking dividend to my $5.96 price upside estimate shows a $6.94 potential gross gain, per share, to be reduced by any costs to trade HMC shares.  

At yesterday's $29.04 price per share, a little over $1000 would buy 34 shares.

A $10 broker fee (if charged) would be paid half at purchase and half at sale and might cost us $0.29 per share.

Subtract that maybe $0.29 brokerage cost from my estimated $6.94 gross gain per share results in a net gain of $6.65 X 34 shares = $226.10 for a 22.6% net gain on a $987.36 investment.

So it is that Honda Motor Co Ltd (HMC) shows a possible 22.6% net gain including a 3.37% forward estimated dividend yield. 

Over the next year at this time, a $1000 investment in Honda Motor Co Ltd could generate $33.70 in cash dividends alone. Note that a single share of HMC bought at yesterday's closing price was $29.04! Thus, Honda Motor Co Ltd's share price is $4.66 less than the dividend income from $1000.00 invested. Thus, according to my dogcatcher ideal, now is a prime time to pick up Honda Motor Co Ltd shares. The estimated next-year dividend from $1k invested is  $4.66 over the single share price. Consider yourself alerted. Its a sign!  Now may be a prime time to buy Honda Motor Co Ltd shares.

All of the estimates above are speculation based on the past history of Honda Motor Co Ltd (HMC). Only time and money invested in this stock will determine its market value.