Investors looking for good dividend yields and growth prospects may want to take a closer look at the auto industry. Grandview Research projects the global auto industry will maintain a 5.7% compound annual growth rate (CAGR) from now until 2030.
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While many car stocks have low price-to-earnings (P/E) ratios and respectable yields, you can also find growth stocks in the sector. Some auto stocks will outshine others, but lower rates are a boon for all car stocks. Rate cuts make it easier for people to borrow money, and that often translates into more car sales. These are some of the top recommendations from experts.
Tesla (TSLA)
Tesla was at the forefront of the EV boom and redefined the auto industry. The company became the first automaker to reach a $1 trillion market cap. While it’s hard to justify Tesla’s valuation if you only look at its cars, if you consider that Musk is at the wheel, it’s easier to explain why Tesla trades at a royal premium.
Ben Kallo, senior research analyst at Baird, raised his price target from $320 to $548, and upgraded the stock to “outperform.” He isn’t bullish on Tesla’s EV business, but shared in a note that he believes Tesla can become “the leader in physical AI.”
“Focus has increasingly shifted to the future for TSLA,” he wrote.
Kallo mentioned Optimus robots and driverless taxis as two catalysts that can cause the stock to surge.
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General Motors (GM)
General Motors hasn’t had a run quite like Tesla, but it’s hard to complain when a stock has more than doubled over the past five years while offering a 1% yield. Ruth Calkins, auto expert and general manager at FindByPlate, outlined the bullish opportunity for GE and two other auto stocks, including Tesla.
“These stocks are lucrative opportunities for investors because they already have a strong presence in the automotive industry, and this puts them at the front line of the electronic and autonomous auto revolution,” Calkins said.
Calkins specifically mentioned GM’s strong lineup that is “strategically positioned to leverage the growing demand for electric and autonomous vehicles.”
The bullish take on GM goes alongside Citi analyst Michael Ward’s maintained “buy” rating. He raised his price target from $61 to $75 per share.
Magna International (MGA)
Calkins cited Magna International’s “advanced technology” when suggesting the stock. The Canadian automaker hasn’t beaten the stock market over the past five years, but it comes with a dividend yield that’s above 4%. If Magna International can leverage its technology to capitalize on EVs and autonomous vehicles, the stock may rally.
TD Securities analyst Brian Morrison is also bullish on the stock. He maintained a “buy” rating and raised his price target from $50 to $52 per share. Shares are up by more than 10% year-to-date and have climbed by more than 50% from their 2025 lows.
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This article originally appeared on GOBankingRates.com: Top 3 Auto Stocks To Watch for 2026, According to Experts
