Amid Friday's report of a lackluster 0.2% gain in August
retail sales, the auto sector was one bright spot.
Two highly rated stocks in the Retail/Wholesale-Automobile
group have ramped up growth in recent quarters. They both also
pay respectable dividends.
Kar Auction Services (
) runs auctions for used and salvaged vehicles. The Carmel,
Ind.-based company also provides financing. Last month, Kar
Auction delivered a 31% gain in Q2 earnings and an 11% rise in
sales. Both were the best in many quarters. Revenue growth has
now picked up for the second straight quarter.
Even though Kar Auction came public in 2009, it just started
to pay shareholder dividends in December. It pays 19 cents each
quarter or 76 cents a year. Kar Auction has a yield of about
Kar Auction is extended from a July breakout past a 24.47 buy
point from a flat base. The stock's gain is getting close to the
20% profit-taking zone.
Penske Automotive Group (
) runs new and used-car dealerships in the U.S. and four other
countries. In July, the company easily beat views with a 27% gain
in second-quarter earnings. Sales rose 12%, the fifth
double-digit gain in the past six quarters.
Analysts polled by Thomson Reuters see profit rising 19% for
this year and 13% in 2014.
Hard times forced Penske to halt its dividend in 2009. But the
company resumed returning cash to shareholders in 2011. Penske
has increased its dividend nine times since then.
Currently, Penske pays a dividend of 14 cents per quarter or
64 cents a year. It has a yield of about 1.5%. The auto dealer's
quarterly dividend has doubled in the past two years.