Ford’s Dividend Stability: Financial Insights and Calculations

Ford Motor Company (NYSE: F) has been paying quarterly dividends since 2012 after resuming payments following a 2006 hiatus caused by financial challenges linked to declining sales and substantial debt. Given this history, it is crucial to assess Ford’s capacity to maintain these dividend payments. To explore how many shares you would need to reach $1,000 in annual dividends, refer to this link.

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Evaluating Ford’s Dividend-Paying Ability

Ford currently offers a 6.2% dividend yield, significantly higher than the S&P 500 index’s 1.3%. While this high yield can be attractive, it may also indicate potential risks regarding future payouts. Over the past year, Ford’s stock has seen a decrease of over 22% as of March 6, contrasting with a 12% increase in the S&P 500, which raises concerns among investors.

To understand Ford’s ability to sustain its dividends, looking at its free cash flow (FCF) is useful. Recently, Ford reported a FCF of $6.7 billion, while its dividend payments stood at $3.1 billion, suggesting a comfortable buffer for maintaining these payouts.

Share Calculations for Dividend Income

Ford has maintained a quarterly dividend of $0.15 per share, totaling $0.60 annually since 2023. To achieve $1,000 in dividends, an investor would need to hold 1,667 shares, which equals $1,000 divided by the $0.60 annual dividend rate. Given that Ford’s stock was priced at $9.90 on March 7, this investment would require approximately $16,500.

In addition, Ford has issued special dividends of $0.65 and $0.18 per share for 2023 and 2024, respectively. However, as these special dividends cannot be guaranteed, the focus remains on the regular ongoing dividend. Should the board choose to announce these special payouts, investors could benefit from increased earnings.

Seizing Investment Opportunities

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*Stock Advisor returns as of March 3, 2025

Lawrence Rothman, CFA has no positions in any mentioned stocks. The Motley Fool also has no positions in the stocks mentioned and follows a strict disclosure policy.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.