• The Toyota Motor Company lists its shares on the Tokyo and New York Stock Exchanges, under the ticker symbols 7203 (Tokyo) and TM (NYSE)
• The company is a component of several major stock indexes, such as the Nikkei 225 and TOPIX in Japan and the S&P 500 in the United States 
• Toyota owns minority stakes in several other automakers, such as Subaru (20%) Mazda (5%), and Suzuki (4.95%). The company also fully owns Daihatsu, which is another Japanese automaker
• The Lexus division of Toyota was launched in 1989 and has become one of Toyota’s most recognizable brands over the years
• As of April 2023, Toyota had a market capitalization of over $220 billion - making it one of the most valuable automotive companies in the world
• Toyota was the first automaker in the world to produce over 10 million vehicles in a single year 
• The company is actively engaged in the development of hydrogen fuel cell vehicles, with the Toyota Mirai fully running on hydrogen fuel
• Toyota is known for pioneering a unique manufacturing principle, called the Toyota Production System (TPS), which emphasizes continuous improvement and waste reduction 
• The company regularly engages in share buybacks to increase shareholder value
• Toyota has a long track record of dividend payments dating back to 1951

While Toyota has been notoriously dovish when it comes to EV adoption, the new CEO Koji Sato has outlined plans to produce 10 EVs by the year 2026. However, how the company plans to achieve this feat remains uncertain. In comparative terms, Toyota only sold 25,000 EV units in 2022, while its hybrid sales surpassed 2.6 million units. Toyota is planning to invest heavily into EV technology to compete with the likes of Tesla, which plans to release 20 million units of electric vehicles annually by 2030. 

Uncertain market conditions and high inflation have proven to be an important operational challenge for Toyota in 2022 and the stock has lost around 20% of its market value over the past 12 months. After CEO Akio Toyoda stepped down and Koji Sato assumed his role, market uncertainty was visible in Toyota’s stock performance. However, new EV plans could very well boost the company back to the previous highs of 2021. 

In terms of financial performance, the Q4 2022 report shows:

• A 25.29% increase in quarterly revenues - to JPY 9.75 trillion (approx. $73 billion)
• An 8.06% decrease in net earnings - down to JPY 727.94 billion (approx. $5.46 billion)
• A 26.65% shrinking in net profit margins to 7.46%

While revenue increases have been nothing short of stellar, the tight profit margin meant that supply chain constraints had severely affected Toyota’s bottom line, which resulted in the gradual sell-off of Toyota stock up until the present. While there may be short-term headwinds ahead for Toyota, the company has promising long-term plans and the stock could rise further once more tangible news of Toyota’s EV plans reach the market. 

Toyota is also a reliable dividend stock with an annual dividend yield of 2.90%. 

Before buying Toyota stock, investors should consider the advantages and disadvantages associated with investing in the company. Toyota’s position in the global automotive market presents the company with some unique opportunities and challenges investors should be aware of before putting their capital at risk. 

Pros

• Strong brand and market share - Toyota is one of the largest and most influential automakers in the world, which gives it an advantageous position in the long run
• Diversified product portfolio - Toyota produces a broad range of transport vehicles, such as cars, trucks, and buses, and also owns minority stakes in companies, such as Suzuki, Mazda, and Subaru
• Focus on innovation - Toyota has long been known as a company focused on innovation in manufacturing, as well as for its commitment to environmentally friendly practices 
• Stable dividends - Toyota has a long history of consistent dividend payments that dates back to 1951 when the company issued its first dividend

Cons

• Reliance on economic factors - consumer trends can have a great impact on Toyota’s bottom line, which is why the company has diversified its revenues to buses and trucks as well
• Currency risk - Toyota’s business is heavily dependent on the exchange rates between the Japanese yen and the US dollar and fluctuations can harm its profits
• Competition - the global automobile industry is intensely competitive, which limits the room for error
• Regulatory risks - global regulatory changes can affect Toyota’s output. Environmental policies and the banning of internal combustion engines could arrive sooner than Toyota’s EV plans fully materialize

• Founded in 1937, Toyota has become one of the largest automakers in the world
• The stock is dual-listed on the NYSE and the Tokyo Stock Exchange
• Toyota has consistently paid dividends every year since 1951 
• The new CEO, Koji Sato, has announced plans to greatly boost Toyota’s EV production by 2026
• 2022 has been a challenging year for Toyota, whose net profit margins fell, as revenues increased 
• Toyota’s continuous advancements in manufacturing allows the company to position itself in a way that can take advantage of the ongoing EV boom in the global automotive market