ford-earningsAutomakers have had a tough year. The rising U.S. dollar has crushed overseas revenue, and exposure to slowing economies in Europe and Asia has put even more pressure on profitability.

For this reason, auto stocks have performed very poorly so far in 2015. For example, shares of Ford Motor Co. (NYSE: F) and General Motors (NYSE: GM) are down 10% and 4%, respectively, year-to-date.

But this is not to say all hope is lost for the major U.S. auto companies. The U.S. economy continues to improve at a modest pace, marked by falling unemployment and the steady rebound in the housing market.

Plus, U.S. consumers have enjoyed a huge collapse in gas prices this year, which is a clear benefit for Ford and General Motors. And, interest rates remain very low, which helps boost demand for auto loans.

While not everything is going perfectly for automakers, the business climate is good enough. That’s why Ford beat earnings expectations on Tuesday.

Revving Up Sales and Profits

In all, Ford’s profits reached $1.9 billion last quarter, a 44% increase. This amounted to Ford’s best quarter since 2000. The company benefited from both higher sales volumes as well as higher prices for its premium line.

The results were especially spectacular in North America, where profits reached a record $2.6 billion. Going forward, Ford expects strong results to continue, since dealers did not have full supplies of the new F-150 last quarter. The F-150 pickup truck is the best-selling vehicle in the United States.

Over the back half of the year, Ford management is confident that dealers will have more pickups to sell, as Ford’s two U.S. truck manufacturing plants will be in full production. Ford reiterated its forecast for $8.5 billion to $9.5 billion in pretax profit this year.

Like Ford, General Motors posted strong results in its own quarterly earnings. General Motors’ profits reached a record $2.8 billion in North America, thanks to solid sales of sports utility vehicles and trucks.

Ford sold nearly 1.7 million vehicles last quarter, a 2% increase. Ford sold more cars in North America and Europe, but fewer cars in South America, the Middle East, and Asia.

Revenue fell slightly to $37.3 billion, but this was due mostly to the rising U.S. dollar. In fact, unfavorable currency exchange shaved off a whopping $2 billion from Ford’s revenue last quarter.

Ford Stock Is Attractive

Ford stock has performed poorly this year, but a turnaround may be on the horizon. The company expects results to improve further over the second half of the year. And, the stock is modestly priced at just 8 times forward earnings per share estimates.

And, Ford stock should be very attractive for income investors. The stock offers a 4% dividend yield, which is a rare opportunity these days. The stock market yields just 2% on average, and with interest rates still near historic lows, fixed-income investments are not a significant source of income.

Ford increased its dividend by 20% this year, which was a very strong increase and an indication that management was confident in the company’s prospects. Given the resilient results over the first half and the prospect for even better numbers over the second half, investors should not be a surprised to see another dividend increase in early 2015.

As a result, Ford stock looks very appealing for value and income investors.

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Published by Wyatt Investment Research at