I have owned stocks across a wide range of industries and sectors through the years. My portfolio has included biotech, consumer goods, energy, financial, medical device, real estate, retail, technology, telecom, and utility stocks plus more.

However, I don't recall ever investing in an auto stock -- until recently. Last week, I initiated a new position in Honda Motor (HMC 1.38%). Here's why I just loaded up on this ultra-high-yield dividend stock.

1. The price is right

Let's face it: Many U.S. stocks are valued at a premium right now. The S&P 500 Shiller CAPE ratio isn't too far below its all-time high. I'm not a nervous Nellie expecting the bottom to drop out over the near term. However, I don't want to pay too much for a stock.

The great news about Honda Motor is that the price is right. This stock trades at a forward price-to-earnings ratio of less than 6.6. Its enterprise value-to-EBITDA multiple is a super-low 2.5. We're talking dirt cheap.

This attractive valuation isn't because Honda's share price has plummeted. Sure, the stock hasn't been a huge winner in 2024. However, it's at least in positive territory. It's not because the company's business is floundering, either. Honda's revenue jumped nearly 17% year over year in the quarter ending June 30, 2024. Profits rose more than 8%.

2. The future is bright

Importantly, I believe Honda's future is bright. I'm not alone in that view, by the way. Analysts surveyed by LSEG project the company will generate average annual earnings growth of 19% over the next five years.

Honda's vehicles are known for high quality and reliability. Consumer Reports ranked the company's Acura brand No. 4 and its Honda brand No. 5 for reliability across all major car brands. I fully expect Honda will maintain its solid reputation.

I also like Honda's strategy with hybrid and electric vehicles. The company has introduced hybrid versions of its CR-V, Accord, and Civic models. It's making the first production hydrogen fuel cell electric vehicle in the U.S. at its Marysville, Ohio, "supercar factory."

3. The dividend is dynamite

You didn't think I would leave out Honda's dynamite dividend, did you? The company's forward dividend yield currently tops 5.4%. I consider any yield that's at least four times higher than the S&P 500's yield as ultra-high. Honda's dividend meets that criterion.

I'd prefer if Honda had a long track record of consecutive dividend increases. Unfortunately, that's not the case. However, the carmaker has nearly tripled its dividend over the past five years and increased its dividend by 26.5% over the past 12 months.

More importantly, Honda is in a strong position to grow its dividend in the future. It has a low dividend payout ratio of 28.6%. This reflects significant financial flexibility to shift more funds to the dividend program.

I plan for Honda to be a long-term holding. I hope it will help generate solid income down the road to help fund my retirement. In the meantime, the stock's high yield makes it easier for me to obtain above-average total returns.