Some stocks are ideal for short-term trading because they’re fast movers. In contrast, General Motors (NYSE:GM) stock is meant to be bought and held for a long time. Indeed, it’s not an insult to call General Motors a “legacy” automaker as the company is an American icon with consistent quarterly profits.
Frankly, if you’re in the market for something unpredictable and risky, you can always buy Tesla (NASDAQ:TSLA) stock. Or, you can invest in a startup automaker like Lucid Group (NASDAQ:LCID) or Rivian Automotive (NASDAQ:RIVN). For a reliable income source, however, I encourage you to set your sights on General Motors.
General Motors Doesn’t Double Down on Robotaxis
If you’re a “steady Eddie” type of investor, you may choose to reduce your portfolio’s exposure to risky, unproven concepts. For example, you might not be fully on board with self-driving taxis, also known as robotaxis.
If that’s the case, then you should know that Tesla and its mercurial chief executive, Elon Musk, are basically doubling down on robotaxis.
According to a report from Electrek (via Yahoo! Finance), Musk is scrapping a proposed plan to build $25,000 electric vehicles (EVs) and instead “asked for all resources to go into the Robotaxi program.”
That move is either bold or foolhardy, depending on how you feel about robotaxis. Unlike Tesla, General Motors is actually dialing back its investment in robotaxis.
Specifically, General Motors expects to reduce its spending on the automaker’s Cruise division by $1 billion in 2024 (Cruise is the money-losing autonomous-driving unit that General Motors acquired back in 2016).
General Motors’ Powerful Electrification Concept
Don’t get the wrong idea. Just because General Motors isn’t pouring too much capital into robotaxis, doesn’t mean the company isn’t taking chances and innovating new product concepts.
General Motors is an old company that’s willing to try out fresh ideas. As an example of this, General Motors-owned GM Energy is rolling out a product that can transfer power from an EV to a home, and vice versa.
It’s an intriguing concept that General Motors calls “vehicle-to-home (V2H) bidirectional charging technology.” It’s designed to “provide power from a compatible GM EV to a properly equipped home.”
Think about when there’s a storm and the power goes out in a home. With V2H technology, you wouldn’t just have to wait around for the electric company to restore the power.
It’s a technology that could become commonplace in a few years – and General Motors will be an early mover in developing and commercializing this concept.
It’s Simple: Buy GM Stock, Reinvest the Dividends
In some ways, General Motors is a prudent company that allocates its capital carefully. Yet, in other ways, General Motors is a bold innovator.
Perhaps you like the idea of V2H technology but aren’t enthused about robotaxis. If so, it makes sense to invest in General Motors instead of trading Tesla stock.
General Motors recently raised its dividend. Tesla and many automotive startups pay no dividends at all.
So, consider being a serious investor instead of a fickle trader. Extend your time frame to years or even decades. Pick up some GM stock shares, and when the dividend payments roll in, reinvest them for maximum long-term gains.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
