Tesla, Inc. (TSLA) recently surpassed Ford Motor (F) in terms of market capitalization.

Tesla now has a market cap of $48 billion, compared with a market cap of $45 billion for Ford.

This is because, in the past five years, Tesla stock gained 755%, versus a 5% decline for Ford.

Investors that had the foresight to buy Tesla shares early on have been richly rewarded. But whether Tesla is a good investment today, is a different question.

Ford has a checkered dividend history—the company slashed its dividend during the Great Recession.

As a result, it is not a member of the Dividend Achievers, a group of 271 stocks with 10+ years of consecutive dividend increases.

You can see the full Dividend Achievers List here.

But, its consistent profitability allows Ford to reward shareholders with a current dividend yield of 5.3%, more than double the average dividend yield in the S&P 500.

Ford also distributes a special dividend each year.

This article will discuss the top three reasons why income investors looking for cheap dividend stocks, should favor Ford over Tesla.

Reason #1: Profitability

Tesla is in high-growth mode. In 2016, revenue increased 17% to $7 billion.

However, as Tesla has grown, its costs have risen in tandem. The company has posted a loss each year for the past decade.

And, its losses have accelerated in recent years.

In 2016, Tesla’s net loss narrowed to $675 million, down from $889 million in 2015. But the loss of $4.68 per share in 2016 was still a bigger loss than the company incurred in 2012-2014.

Source: Tesla SEC Filings

Tesla investors are banking on the company putting up huge growth going forward.

In time, investors envision Tesla becoming a renewable energy powerhouse, that can sell automobiles, and also power homes.

Tesla acquired SolarCity last year, for $2.8 billion.

In 2017, the company started production of battery cells for energy storage products at its Gigafactory 1 facility.

Tesla also operates the Gigafactory 2 solar plant in New York, and this year expects to finalize locations for Gigafactories 3, 4, and possibly 5.

The Gigafactory complexes should allow for a huge expansion going forward. Gigafactory 1 alone supports production of 500,000 cars per year.

There are two potential risks with this strategy.

First, these growth assumptions could be overly ambitious. Tesla produced just 84,000 vehicles in 2016. It is not yet clear that there is enough demand for 500,000+ vehicles each year.

Second, Tesla has not proven it can produce profitably. The company continues to lose money each year.

It has made moves to gain scale, including the January 2017 acquisition of Grohmann Engineering, a German manufacturing company with expertise in automated production.

However, it has not gained scale from expanding production to this point.

By contrast, Ford is highly profitable.

The company’s pre-tax profit declined 2% in 2016, but it still generated $10.4 billion of automotive profit for the year.

Source: Q4 Earnings Presentation, page 9

Ford maintained a 6.7% automotive operating profit margin in 2016.

Ford has warned investors that 2017 profits are likely to fall short of 2016 levels. But the company still expects at least $9 billion in pre-tax profit for the year.

Ford’s March vehicle sales declined 7%, but average vehicle prices rose by 3.4%. And, Ford continues to have an ace up its sleeve, in the form of the F-Series line of pickup trucks.

The F-150 is the best-selling vehicle in the U.S., and the F-Series has been America’s best-selling truck for 40 straight years.

Ford sold more than 6.6 million vehicles last year–nearly 80 times more than Tesla’s vehicles delivered.

Reason #2: Dividends

Investors appear concerned that the slowdown in U.S. auto sales and the combination of higher interest rates, will cause earnings to decline significantly up ahead.

While Ford does expect 2017 profit to be below 2016 levels, this is mostly due to the company’s investments in technology, such as autonomous vehicles, and not because of falling demand.

The company expects profitability to improve again in 2018.

Its consistent profitability allows Ford to pay a hefty dividend to shareholders.

In addition, Ford’s financing trends have remained stable.

Source: Q4 Earnings Presentation, page 25

Plus, Ford has a huge amount of cash on its balance sheet, which helps support its dividend.

Ford ended 2016 with $27.5 billion of cash on hand in the automotive segment, compared with $15.9 billion of automotive segment debt.

Ford’s automotive segment is financially healthy, with $11.6 billion of net cash.

Even though Tesla has a slightly higher market capitalization than Ford, it has just $3.4 billion of cash, along with $5.8 billion of long-term debt on its balance sheet.

Ford’s current dividend yield is 5.3%. And, Ford has paid special dividends in each of the last two years, including a $0.05 per-share supplemental payout in 2017.

As a result, its effective dividend yield based on its regular and 2017 special dividend payout is 5.8%.

Reason #3: Valuation

To say that Tesla stock has beaten the market over the past five years, would be a huge understatement.

Source: 2016 Annual Report, page 36

Tesla’s massive rally over the past several years has not been accompanied by earnings growth.

While Tesla has a very promising future, the expectations are extremely high. Tesla has soared to a nearly $50 billion market value, but the company has still not turned a profit.

Analysts do not expect Tesla to be profitable until 2018. Even then, Tesla is projected to earn just $1 per share.

That means investors buying at today’s prices do so at a price-to-earnings ratio of approximately 295, based on 2018 earnings-per-share.

While Ford’s revenue and earnings growth has stalled, the upside of buying the stock today is that the expectations are fairly low.

Ford generated adjusted earnings-per-share of $1.76 in 2016. Based on this, the stock trades for a price-to-earnings ratio of just 6.

Those buying Tesla stock at its present levels are taking a lot more risk.

Even if Tesla grows revenue at a double-digit rate moving forward, the stock could generate losses for shareholders, especially if the company does not become profitable.

And, if future vehicle deliveries fall short of the sky-high expectations, the losses could be severe, with no dividend or earnings to support the share price.

Final Thoughts

Tesla shares have produced huge gains for investors over the past several years. At the present time, however, it is better served for investors with a particularly high tolerance for risk.

Investors have to pay a very high price to buy the stock. And, since the company is not profitable, future returns will come from other investors willing to buy the stock at an even higher share price, not from earnings and dividends.

Ford sells far more cars than Tesla and is much more profitable. Ford stock is cheap, and it has a 5.3% dividend yield, along with annual special dividends.

These margins of safety make Ford the better stock pick for value and dividend investors.