- Dividend Brief
- Posts
- This Car Repair Dividend Stock Is Back In the Fast Lane
This Car Repair Dividend Stock Is Back In the Fast Lane
After months in reverse, this auto parts stock is showing signs of recovery. With cash still flowing and shareholders still rewarded, it’s time to pay attention before momentum builds.
Noah Zelvis
December 26, 2025
Cars do not stop breaking just because markets get nervous.
After a bruising sell-off, this essential auto parts business looks like a timely income opportunity. Buckle up to find out more.
Breakout Setup (Sponsored)
Many investors are seeing solid gains in today’s market, but solid gains often hide opportunities with far greater potential.
A new analysis highlights the 5 Stocks Set to Double, selected from thousands of companies showing early signs of powerful growth.
These picks feature strong fundamentals and technical indicators that often appear before meaningful upside.
Past editions of this research uncovered gains of +175%, +498%, and +673%.
Download the 5 Stocks Set to Double. Free Today.
*This free resource is being sent by Zacks. We identify investment resources you may choose to use in making your own decisions. Use of this resource is subject to the Zacks Terms of Service.
*Past performance is no guarantee of future results. Investing involves risk. This material does not constitute investment, legal, accounting, or tax advice. Zacks Investment Research is not a licensed dealer, broker, or investment adviser.
LKQ Corporation (NYSE: LKQ) is one of those stocks income investors often overlook, and that may be where you find your next opportunity.
While the market chases growth stories, this business is quietly benefiting from a powerful, very real trend: cars are staying on the road longer.
With new vehicle prices high and repair bills rising, drivers are fixing, not replacing. That demand is not optional, and it feeds directly into LKQ’s core business.
Every ageing vehicle, every delayed upgrade, strengthens the case for dependable parts suppliers with scale.
If you’re looking for an immediate portfolio addition, the timing couldn’t be better.
This is a company that has already absorbed inflationary pressures and supply chain disruptions and come out the other side, still generating cash.
That puts it in a strong position to keep rewarding shareholders while others are still finding their footing.
Never Miss a Stock Recommendation Again!
We now send our dividend picks right to your phone via text, so you’ll get the same actionable moves without having to open your inbox.
Under the bonnet: how LKQ actually makes its money
LKQ Corporation runs a business that does not waste time chasing trends. It focuses on volume, efficiency, and scale, and it does it exceptionally well.
At its core, LKQ supplies recycled, refurbished, and aftermarket auto parts to repair shops, insurers, and mechanics.
That means bumpers, engines, panels, and components that keep cars on the road without the premium price tag of new OEM parts.
When repair bills matter, LKQ becomes the obvious go-to.
What really powers the model is scale. Thousands of dismantling and distribution locations, deep inventory, and logistics that get parts where they are needed fast.
That creates a competitive moat that is hard to replicate and even harder to disrupt.
Rare Qualifiers (Sponsored)
I'd like to give you a free copy of our brand-new report: 7 Best Stocks for the Next 30 Days.
Our objective, mathematical stock prediction system has consistently outperformed the market — delivering strong returns over decades.
This just-released Special Report reveals the 7 most explosive stocks from our top-ranked selections.
Fewer than 5% of stocks qualify to be one of our “7 Best.” These could be the most exciting short-term trades in your portfolio.
Don’t wait — see these picks before your next trade.
Download it now, absolutely free.
[Click Here for the Free Report]
*This free resource is being sent by Zacks. We identify investment resources you may choose to use in making your own decisions. Use of this resource is subject to the Zacks Terms of Service.
*Past performance is no guarantee of future results. Investing involves risk. This material does not constitute investment, legal, accounting, or tax advice. Zacks Investment Research is not a licensed dealer, broker, or investment adviser.
Built for the long haul
There is also an innovative sustainability angle baked in.
Reusing parts is cheaper, faster, and more environmentally friendly, which insurers and repair networks increasingly prefer.
That quietly strengthens demand without LKQ needing to change how it operates.
This is not a fragile business. It thrives on ageing vehicles, rising repair costs, and everyday necessities.
The engine keeps turning whether the economy is hot or cooling, and that reliability is exactly what income investors should be looking for.
Action Item: As an industry backbone, this stock supports dependable cash flow. If you value businesses that earn steadily rather than spectacularly, LKQ fires on all cylinders. |
Proven Framework (Sponsored)
Curious how seasoned investors structure their crypto approach?
This free guide lays out a streamlined three-step framework built for those seeking growth-focused opportunities in a rapidly shifting market.
It breaks down a core asset for long-term exposure, satellite plays designed for targeted bursts, and a leveraged strategy aimed at extended cycles.
The full blueprint is available at no cost—but only until midnight.
Competitors are already moving, and hesitation could mean missing the window.
Secure your free copy before access closes.
Recent earnings: steady hands on the wheel
LKQ Corporation did not deliver fireworks in its latest quarter, but it did deliver what dividend investors actually want: control, consistency, and cash.
Third-quarter results showed revenue holding firm at around $3.5 billion, proving demand for repair parts remains resilient even in a more challenging operating backdrop.
Earnings were slightly softer year on year, but not in a way that changes the bigger picture.
Poll: Which feels more stressful? |
The engine's still firing
The real takeaway was cash flow. LKQ continued to generate strong free cash flow and used it exactly as income investors like to see, funding the dividend and buying back shares without stretching the balance sheet.
This was not a growth-at-any-cost quarter. It was a reminder that the business does what it says on the tin.
Generates cash, stays disciplined, and keeps shareholders front of mind. That is a reassuring signal when you are thinking about adding to an income portfolio now, not later.
Dividends with room to grow
LKQ Corporation offers a dividend that feels increasingly well-judged for the moment we are in.
It pays 30 cents per quarter, giving the stock a 3.97% yield that is competitive without looking stretched.
More importantly, this is not a one-off payout story. LKQ has grown its dividend for three consecutive years, and it is doing so from a position of strength rather than pressure.
The payout ratio is a comfortable 36.38%, leaving plenty of room for reinvestment, buybacks, and future increases.
That low payout ratio matters. It suggests the dividend is being funded by real, recurring cash flow, not financial gymnastics.
In other words, management can keep rewarding shareholders without putting the business at risk.
Action: LKQ isn’t an aggressive income play. It’s a sensible one, but it is heating up. Building a position in stages makes sense here. |
The risks worth keeping an eye on
LKQ Corporation is a steady business, but it is not immune to pressure. The most significant risk is a prolonged slowdown in miles driven or accident rates.
Fewer collisions and fewer repairs would soften demand, even for a cost-focused supplier like LKQ.
Margin pressure is another factor. Labor, logistics, and inventory costs can creep higher, and while LKQ has scale on its side, it cannot always pass those costs on immediately.
That can weigh on earnings in the short term and test investor patience.
There is also execution risk in Europe. The business has been working through operational complexity and uneven performance across regions.
Progress has been made, but it remains an area that could drag on results if conditions worsen.
The long-term income case still stacks up
LKQ Corporation is the kind of stock that quietly earns its keep. It does not need optimism, excitement, or perfect conditions.
It just needs cars to keep breaking, bumping, and ageing. And they always do.
This is a business wired into everyday reality. People delay holidays, gadgets, and upgrades, but they still fix their cars.
That steady, unglamorous demand is exactly what keeps cash flowing through LKQ quarter after quarter.
From an income perspective, the story is refreshingly sensible.
The dividend is well covered, increases have been steady rather than reckless, and management continues to balance payouts with buybacks and reinvestment. Nothing flashy, nothing forced. Just consistency.
That’s all for today’s edition of the Dividend Brief.
Thanks for reading, and if you have any feedback or dividend stocks you want me to take a look at, just reply to this email!
—Noah Zelvis
DividendBrief.com