Strength in the auto industry has lifted key companies in the sector for a long time, but technological innovation has also played a key role in driving the industry forward. Tesla (NASDAQ: TSLA) has taken the electric vehicle niche by storm, putting together a lineup that could eventually go from roadsters to semi-tractor trailer trucks for commercial purposes. Meanwhile, Ford Motor (NYSE: F) has stuck to its guns, combining its existing domination of vital parts of the automotive product spectrum with efforts to modernize and keep up with the pace of innovation throughout the industry.

Investors have been so excited about CEO Elon Musk and his vision for the future that they've rewarded Tesla with a market capitalization that's well higher than Ford's. Yet there's still controversy among investors about which stock is a better choice right now. Let's look more closely at both Tesla and Ford for clues as to which one deserves a spot in your portfolio.

Image source: Tesla.

Stock performance and valuation

Tesla and Ford have been going in opposite directions lately. The up-and-coming electric car specialist is up 35% over the past year. Ford is down 15% since March 2017.

TSLA data by YCharts.

With well-established automakers, valuation metrics like price-to-earnings ratios can be handy. Yet using such analysis with Tesla quickly becomes fruitless, because the electric vehicle company hasn't been consistently profitable and is unlikely to start making money on a regular basis until 2019. Ford, on the other hand, has extremely low earnings-based valuations, reflecting in part many of the legacy obligations it has on its balance sheet. Tesla trades at nearly five times sales, compared to just 0.25 times sales for Ford, and disparities in other measures like price-to-book are similarly wide. Traditional value investors would say that Tesla is incredibly expensive right now, while others would point to disparities in potential growth rates, as we'll see in greater detail below.

Dividends

If you want a dividend, Ford's your only choice between these two companies. Tesla doesn't pay a dividend and isn't likely to anytime in the near future. Ford has a high yield of 5.6% and has made dividend payouts even with the turbulence in the auto industry over the past decade.

Ford never declared bankruptcy in the aftermath of the financial crisis and recession of 2008, but there was a period of more than five years in which it chose to suspend dividend payouts. Yet in 2012, the automaker came back with a dividend, and over the past several years, it has gradually made increases that eventually led to a tripling of its regular quarterly payout as well as a number of additional special dividend payments.