Is Stellantis a Dividend Gem Hiding in Plain Sight?

Stellantis (NYSE: STLA) probably isn’t the first ticker that comes to mind when investors think “income stock.” But maybe it should be. The global auto giant, which straddles Italy, France, and the U.S. is delivering one of the highest dividend yields on the market today. It’s not just about the headline number, though. There’s a lot going on beneath the surface that most investors overlook—and some of it’s surprising.

Key Points

• Stellantis pays an 8% dividend, but only once a year and it fluctuates with earnings. A 15% Dutch tax also reduces the effective yield for U.S. investors, especially in retirement accounts.

• Between dividends and buybacks, Stellantis delivered a 13% shareholder yield.

• Low-cost EV production in Poland, merger synergies, and a robotics sale offer upside. But auto cyclicality, EU tariffs, and currency/tax headwinds pose meaningful risks.

That Fat Dividend Comes With a Catch

At first glance, the 8% yield looks like a gift. Stellantis recently proposed a €0.68 per-share dividend (around $0.77), which works out to an eye-popping yield based on its sub-$10 stock price.

But unlike most U.S. companies that pay out quarterly, Stellantis only cuts a dividend check once a year. And that check is based on how well the company did the previous year.

In strong years, like 2022, the dividend soared to €1.55. In tougher times, like the profit-plunging 2024, it got slashed. And if you buy the stock after the April ex-dividend date? You’re waiting a full year for your payout.

One more wrinkle is Stellantis is technically domiciled in the Netherlands. That means a 15% Dutch withholding tax applies to dividends, unless you’re in a taxable account and can claim a credit. If you’re holding Stellantis in an IRA, that tax hit is permanent.

Buybacks Add Muscle to the Real Yield

Dividends aren’t the only way Stellantis rewards shareholders. In 2023, management went big on buybacks, returning €3 billion and retiring about 5% of outstanding shares. While those repurchases are on pause in 2024 due to falling profits, the company still has authorization to buy back up to 10% of shares once the cash starts flowing again.

Put dividends and buybacks together and Stellantis delivered a combined shareholder yield of over 13% last year, making it one of the most generous return programs in the entire global auto industry.

The Balance Sheet Is Built Like a Tank

Even with profits falling 70% last year, Stellantis ended 2024 with €15.1 billion in net cash and a stunning €49.5 billion in total liquidity.

It also explains why credit rating agencies like Fitch still give the company investment-grade status (BBB, with a stable outlook), and why management didn’t flinch when keeping the dividend intact through a rough patch.

Catalysts Most Investors Overlook

Stellantis has a few under-the-radar catalysts that could unlock significant value for shareholders. One of the most interesting involves its electric vehicle production in Poland. Through its 51% stake in the Leapmotor joint venture, Stellantis is manufacturing EVs at a cost of just €400 to €500 per unit, on par with Chinese factories and dramatically cheaper than most European plants.

With mass production set to begin in September 2024 and a second model slated for early 2025, the company is carving out a major cost advantage in what has become an all-out price war across the European EV market.

Another impactful move came from the company’s robotics division. Stellantis recently offloaded a 50.1% stake in Comau, its industrial automation arm, to One Equity Partners. This sale not only raised fresh capital, but it also opens the door to potential special dividends or strategic reinvestments, offering financial flexibility at a time when cash counts more than ever.

And finally, the long-term benefits of Stellantis’ 2021 mega-merger are still unfolding. While management originally targeted €5 billion in synergies, they blew past that goal two years early, hitting €7.1 billion by 2022. At this point, every additional euro saved is largely profit—fueling a leaner, more efficient business that could deliver bigger returns over time.

But It’s Not All Smooth Driving

Investors should go in with eyes wide open—because while Stellantis has compelling upside, the risks are real and can’t be ignored.

First, the auto industry is notoriously cyclical, and Stellantis got a harsh reminder of that in 2024 when its earnings plunged 70%. It didn’t take a global recession to trigger that drop—just a shift in demand and rising inventories. That kind of volatility is baked into the business model, which means dividend stability is always at risk when the cycle turns against automakers.

Then there’s the challenge of electrification. Stellantis is transitioning to its new STLA multi-energy platform, but it’s not cheap. The company is guiding for only mid-single-digit margins in 2025, suggesting that the EV ramp-up will continue to pressure profitability. If those margins don’t expand over time, investors expecting a quick return to fat earnings could be disappointed.

Regulation adds another layer of uncertainty. The European Union is slapping a 21% import duty on Chinese EVs, and Stellantis’ Leapmotor vehicles, produced in Poland using Chinese designs, are caught in the crossfire. That could eat into the very cost advantage the company was counting on to compete in a price-sensitive market.

And finally, U.S. investors have to contend with two annoying drags, currency and tax. Because Stellantis pays its dividend in euros and is subject to Dutch withholding tax, the effective yield may be meaningfully lower than advertised. Investors in IRAs, in particular, will feel the bite, as they can’t reclaim the withheld taxes through a credit.

A Contrarian Income Play If You Can Stomach the Volatility

Stellantis isn’t your typical dividend stock. It’s cyclical, globally complex, and pays just once a year. But if you can look past those quirks, there’s a lot to like: a strong balance sheet, solid cash returns, undervalued hidden assets, and a forming moat in low-cost EV production.

Yes, the ride will be bumpy. But for income investors willing to hold through the cycle, and okay with running some after-tax math, Stellantis could be a rare blend of value, yield, and optionality in a sector not known for generous shareholder returns.