Elon Musk May Be About to Give Us a Dividend Stock

Income Investing, Technology Stocks
by Tim Plaehn
Subscribe to all of Tim Plaehn’s free investing research

The recent deals by Tesla Inc. (TSLA) to allow Ford Motor Co. (F) and General Motors Co. (GM) electric vehicle owners to use the Tesla Supercharger network will be huge for Tesla.

I hypothesize that Tesla will spin out the Supercharger network as a new company…

That may eventually pay dividends!

Here’s why…

Tesla car in a show room

It was a huge coup for Tesla when Ford made a deal for owners of Ford-produced EVs to recharge using Tesla’s Supercharger network. Soon after, a similar agreement was announced with GM. As a result, Ford and GM EV owners will be able to charge their vehicles at the 12,000 Tesla Supercharger stations without having to use adapters. Instead, new Ford and GM EVs will be built with Tesla Supercharger charging ports.

These deals put Tesla in a position to dominate EV recharging in the U.S. This table from Bloomberg shows the lead already held by the firm:

Owning and operating EV charging stations can be very profitable. Chargers are expensive to install, but gross margins can be very attractive once they are operating. For example, the average rate for retail electricity in the U.S. (it varies a lot!) is $0.11 per kilowatt/hour. Fast-charge charging stations often charge $0.40 to $0.50 per kWh.

I have a couple of suggestions for Elon Musk and Tesla from this current position.

Tesla should look into spinning off the charging network into a separate business. There are just a few publicly traded EV charging companies, and they are not profitable. A public Tesla recharge company would crush these smaller competitors and could very likely consolidate and grow.

Once the new charging network company is a separate stock, I would love to see them start to pay a dividend. Attractive and growing dividends are common in the energy sector, and this new company would be an energy sector stock. A different and potentially dominant energy sector stock.

My idea of a dividend-paying Tesla/Musk-related company is just a dream, but one day it could be a reality. In the meantime, check out my Dividend Hunter newsletter service below for high-yield, low-risk stocks available today.

Author: Tim PlaehnTim is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory focused on creating a high-yield income stream and it's companion service The Dividend Hunter Insiders, Weekly Income Accelerator, a covered call trading service, and for investors looking for long-term total returns from their income investments using stocks with ever-growing dividend payments, he offers Monthly Dividend Multiplier. He co-edits POWR Income with Jay Soloff. Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F-16 Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U.S., Europe, and Asia. Tim graduated from the United States Air Force Academy with a degree in mathematics. In his free time he tours the United States parks, campgrounds, and wilderness areas in his travel trailer.
Subscribe to all of Tim Plaehn’s free investing research