What are your thoughts on investing in Nissan?

[greedisgood]

I'm thinking about buying 100 shares of Nissan for my NISA because of their high dividends. With the recent Ghosn scandal, I would have expected the stock price to fall, but it actually increased to ¥1006 yesterday.

Does anyone think Nissan is a good investment right now? With the 100 share purchase requirement, it's hard to find high dividend stocks that wouldn't eat up 20%+ of my NISA.

[RetireJapan]

It's actually down 13% since I bought it, so there is that...

I don't know how much their apparent coup is going to come back and hurt them as a company. Would probably be in my 'too hard' drawer.

[ricardo]

They’ll still be making cars 30 years from now.

It depends on the balance of your portfolio. And, if you’re playing around with (the minimum) 100 shares, this sounds like a hobby - not a serious investment strategy. So it doesn’t really matter given the trivial sum involved.

[zeo]

IMO Nissan is behind the ball. Which is odd because Ghosn got them really ahead when he pushed the Leaf forward so fast, but they lost focus and have been leapfrogged by a lot of other companies. The future of mobility is changing rapidly, GM announced they were laying off 14% of its salaried workforce and closing 5 plants. These plants made sedans and small cars that sold poorly in the US, but they also announced all the money would be used to fund fully electric vehicles and self-driving cars. GM putting that much money in electrics and self-driving vehicles tells you the writing is on the wall now. Nissan needs to make some serious changes, like the kind Ghosn did when he took over Nissan. I have a hard time believing a Japanese management team is capable of that. I'd be thrilled to be proven wrong, but I'm not optimistic.

[jcc]

Cars are not a growth sector. You'll likely get decent dividends, but there will be little growth unless a game-changer comes. And last I checked Nissan isn't on the shortlist of makers at the forefront of self-driving cars and the like.

Personally I'm sticking to not doing single stocks. It may be more exciting but it's a game you're playing at a disadvantage, so I just don't do it

[adamu]

The only reason for the layperson beyond speculation I can see for owning individual stocks is if you can get them in better than market conditions - employee grants, stock options, etc. If you have to buy at the market price, you're just swimming with sharks and the odds are stacked against you.

[TokyoWart]

I bought 200 more shares of Nissan after the scandal broke because the stock already seems cheap by P/E and P/B measures but I don't have a lot of confidence in that purchase. I bought some early in the Great Recession and this brings my basis to about 800 yen/share. I'm not too confident about the stock because the industry looks to change so much with self-driving cars and to a lesser extent because of electric motors. I also agree with adamu that we individual investors should avoid individual stock picking but I don't buy mutual funds in Japan because of the complicated reporting requirements for US investors so I reinvest my dividend income by buying a wide variety of individual names which look cheap on financial measures.

[mighty58]

I'm very uncomfortable with the whole situation with Ghosn & Kelly. I don't know if they're guilty or not, but the nationalistic bent it all has is rubbing me the wrong way. This is just me, but I can't ethically support them, for the same reason I won't buy anything Olympus related for the way they treated Michael Woodford. I'm no defender of executive greed, but for me it's the lesser of two evils when compared to the exclusionary, and dare I say, racist undertones that surround all this.

Plus, Ghosn was the big driver behind the high dividend policy, from what I understand. If a re-Japanification of the board is underway, the odds would be against the high-dividend continuing.

[DragonAsh]

As noted, I don't think investors really should be investing in individual stocks as a general rule, although I do see some potential utility in taking a small portion of your portfolio and using it for certain one-off trade ideas. I did just that in 2008, buying a big chunk of Nissan shares at around Y300 because the dividend yield was around 10%, which I thought was a decent buffer against further downside for the share price at the time.

Nissan as a company is highly unlikely to go bankrupt, and a dividend yield of 6% does look enticing. However a) you get taxed on that unless you're in a NISA account etc and b) if the stock falls 10%, you're down 4% overall AND you still get taxed on the dividend. Also worth noting that one factor behind the high dividend could be the high ownership stake by Renault - remember, dividend payment by Nissan is dividend revenue for Renault. A changing of the guard at Nissan could change that, although even Japanese investors are increasingly vocal about ensuring Japanese companies maintain reasonably high payout ratios.

Personally I don't see the benefit - buying 100 shares to pick up Y12,000 in dividends a year later, that you then get taxed on, plus whatever you pay in transaction costs, plus the risk if the shares decline? Meh. If part of an overall, long-term buy-and-hold strategy? Sure - but if you're only buying it for the current dividend yield, I think it's probably not a great option.

[greedisgood]

Thanks for the advice everyone!