In this article, we take an in-depth look at the stock price for Toyota which is one of the largest automobile manufacturers in the world. The Japan-based heavyweight is currently valued at a market cap of $247 billion, at the time of writing. Let’s see what has impacted the Toyota stock price over the years, how the company has performed compared to the broader markets, and if it should be on your buying radar right now.
Toyota Motor Corp. trades as an ADR (American Depository Receipt) on the New York Stock Exchange. The Toyota stock price on the NYSE has underperformed the broader markets in recent years. Since October 2020, Toyota stock has returned 38%, compared to the S&P 500 gains of 42.3%. Toyota shares have returned 226% in the 10-year period of 2001 to 2021.
Shares of Toyota began trading on the NYSE back in 1977 at a price of $32 per share. Toyota stock per share fell close to 24% in its first year of trading and then rose by 64% in 1978. The automobile industry is highly cyclical. This means companies part of this sector perform exceedingly well during periods of economic growth and lose significant ground in periods of recessions.
Toyota stock lost 28% in 1979, 26% in 1984, 28% in 1990, 35% in 2000, and 38% in 2008. Comparatively, it rose by 41% in 2012, 31% in 2013, 83% in 1999, 36% in 1996 and 36% in 1993. The stock price for Toyota Motor Corporation also rose by 41% in 1988 and by 121% in 1986.
Toyota Motor or TYO stock price underwent a 5:1 split back on March 15, 1982. After accounting for this corporate action, the stock price for Toyota Motor touched an all-time low of $5.15 back in 1977. Its record high was established in 2021 when it rose to $186.52.
Generally, when a company splits its shares, the market cap does not change. Instead, the number of outstanding shares and the stock price are adjusted accordingly. So, in case you owned 100 Toyota shares priced at $30 before the spilt, your portfolio value would be $3,000. Now after the 5:1 split, you would own 500 shares, each priced at $6 which shows us the portfolio value remains unchanged at $3,000.
However, a stock split is viewed as a positive corporate action by investors as it reduces the trading price of shares, which in turn boosts liquidity and demand. Generally, the share price of a company appreciates after it undergoes a split. The shares of Toyota also rose by 70% in the 12-months following its stock split.
Toyota stock has returned over 10,000% to investors in dividend-adjusted returns since its public listing. This translates to annual returns of 11% since 1978.
But we know that past returns don’t matter much to current and future investors. The analysts tracking Toyota stock have a 12-month average price target of $221 which is 26% above its current trading price. After accounting for the company’s forward yield of 2.6%, total returns will be closer to 29% in 2022.
As an example, in October 2021, Yahoo Finance showed that two analysts from Wall Street extensively covering Toyota stock. One has a “hold” recommendation and one has a “sell” recommendation right now. There are no “buy” recommendations for Toyota stock.
For investors who want to buy Toyota stock today and add one of the world’s automobile leaders to their portfolio, you can create an account with ZFX, a platform that has a worldwide presence. ZFX is a regulated platform for contracts for differences or CFDs as well as forex, stock, index and commodity trading. The ZFX platform enables users to trade or invest across asset classes that include commodities and multiple indexes.
A major benefit of using ZFX as a platform to trade Toyota stock is that the user can do so without having to assume ownership of the asset class as well as enjoy the benefits of leverage.
In order to buy Toyota stock, the user will be using ZFX’s MT4 platform which supports a wide variety of order types allowing you to trade from charts. The ZFX MT4 provides advanced analytical tools & indicators as well as comprehensive statements and reporting in addition to a live news feed feature.
It easily integrates with the existing trading infrastructure where users can attach additional programs due to API protocols. You can also back-test your strategies before investing real capital into the stock market. Here’s how you can buy the stock on the ZFX platform.
In order to trade through the ZFX platform, you need to first open a trading account. To do so, go to ZFX’s homepage and click on “Open an account” at the top of the page. On the form that pops up, you’re required to fill in all your personal data and press “Next” when you’re done.
Depositing funds into your account is the next step. You can begin your trading journey for as low as $50, depending on the type of account you select.
Simply select the amount you want to deposit and the method of payment (bank transfer or credit card).
As part of the KYC (know your customer) process, ZFX requires all newly registered investors to provide proof of identity (such as a valid passport), as well as a confirmation of residence (such as a valid utility bill dated to the last six months). Bear in mind that ZFX takes approximately 24 hours to review and verify identities.
After opening the ZFX account, you can begin trading Toyota stock CFD. To do so, download the MT4 platform using the link provided by ZFX, After installing the software on your device, log in using the details ZFX sent to your inbox and start investing in Toyota stock.
Founded in 1933 and headquartered in Japan, Toyota Motor Corporation designs, manufactures, assembles, and sells passenger vehicles, minivans, and commercial vehicles as well as related parts and accessories. It operates via three business segments that include Automotive, Financial Services, and All Other. But let’s see if the automobile giant has a place in your portfolio today.
Tesla, which is the undisputed leader in the electric vehicle space, has just been valued at a valuation of $1 trillion making it the second-fastest publicly listed company to do so. The electric vehicle segment is all set to explode in the future as governments and organizations are pumping in billions of dollars to create a robust infrastructure which will drive consumer demand higher.
While Tesla enjoys a first-mover advantage, Toyota and other legacy manufacturers with experienced management teams have navigated volatile macro-environments in the past. Further, the capital expenditure spending by Toyota and peers will be much lower compared to Tesla as they can leverage existing manufacturing and production facilities to meet vehicle delivery targets.
In October 2021, Toyota disclosed it plans to spend $14 billion in order to manufacture batteries and establish a battery supply chain for EVs in the upcoming decade. Toyota expects to reduce battery prices by 30% or more as it is poised to benefit from economies of scale.
Toyota has been a world-leader in manufacturing gasoline-powered hybrid vehicles such as the Prius. But it is yet to commit and launch a vast line-up of electric-powered vehicles until now.
Toyota will deploy capital to introduce its solid-state batteries by 2025 which can be used in EVs and as well hybrid automobiles. The company will also launch a lithium-ion battery at a lower cost and higher performance in the second half of the current decade. In fact, by 2030, Toyota is optimistic to manufacture over 200 gigawatt-hours battery each year at a cost that will be 50% lower to the current lithium-ion batteries.
Toyota continues to focus on improving shareholder returns for investors. Moreover, it is looking to enhance its corporate structure in order to realize sustainable growth. The company confirmed it will strive for the stable and continuous payment of dividends. Moreover, it will maintain or improve upon its consolidated dividend payout ratio of 30%.
Toyota emphasized it will utilize internal funds for investment growth that includes shifting towards clean energy solutions. For 2021, Toyota expects to pay a year-end dividend of 135 yen ($1.19) per share of common stock. If we include the interim dividend of 105 yen ($0.92) per share the annual dividend will be 240 yen ($2.11) per share this year. This results in a payout of 671 billion yen ($5.89 billion) in 2021.
Following its board of directors meeting earlier this year, Toyota said it is authorized to repurchase 41 million shares of common stock at a total maximum amount of 250 billion yen ($2.2 billion). The company aims to repurchase shares to promote capital efficiency after considering factors such as capital expenditures, dividend payouts, liquidity reserves and interest payments.
Investors should note that dividends and share repurchases can add incremental wealth over time and result in compounded gains. For example, Toyota stock has risen by 153% in the last 10 years. After accounting for dividends, total returns rise to over 225%.
You need to understand that investing a particular company is always risky. Indeed, for an entity to keep delivering consistent returns over the long-term is not an easy goal. While Toyota has managed to deliver inflation-beating returns for more than four decades, there is no guarantee the company will be able to replicate its performance going forward.
In fact, Toyota has delayed investing in the EV space. This is because the company long believed high battery costs as well as long charging times will limit the adoption of EVs. This might hurt the company going forward as it has already lost ground to other legacy players such as Hyundai and Volkswagen who have accelerated EV investments in recent years.
Instead, Toyota bet on the rising adoption of hydrogen fuel cells that have quicker charging times. It also expected gasoline-fueled hybrid vehicles to play a substantial role in the next two decades. According to the company, hybrids may be a cleaner option compared to EVs in countries where massive amounts of electricity is generated via fossil fuels.
Toyota has accepted that EVs are here to stay. As such, it will deploy billions of dollars in the next few years to regain lost ground in this sector. In the short-term, it will continue to be impacted by headwinds. These include disruptions to supply chains and a slower than expected global economic recovery.
In a nutshell, Toyota has a vast manufacturing footprint at the global level and a robust supply chain. This suggests the company is well on track to become a major contender in the fast-growing EV space as the world transitions towards this highly disruptive product.