Managing Director Marvin Kline of Logan Capital Management says his firm added Toyota Motor Corp (ADR) (TM) in the second quarter because they found the company had a strong dividend yield and balance sheet.
“Toyota, at the time we brought it, had a 3% yield. They announced that they are buying back stock,” Kline said.
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Kline says people may not be aware that Toyota’s balance sheet is comprised of cash and marketable securities. Therefore the company has a lot of asset value in addition to its operating business.
“If you subtract the value of the company’s investments from its market value, it is selling at a very low multiple of earnings,” Kline added. “At the time we bought the stock, Toyota’s stock price had been knocked down because it announced a major recall of 6.4 million vehicles. So at the time of purchase, we found the stock attractive because of the dividend yield, the strong balance sheet and its earnings growth.”
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