Ford Stock Dividend Analysis: What Investors Should Know

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1 year ago

Over the past four quarters, Ford (F) shareholders have collected $0.60 in regular dividends plus a $0.65 special dividend. That seems generous for a stock that costs only $12. Is it time to snap up Ford shares and cash in on the passive income?

Get the details on Ford’s dividend below, including yield, payout ratio, growth and the company’s history of making those shareholder payments.

Key Points

Ford’s dividend yield is currently 5.2%, higher than General Motors’ (GM) and lower than Stellantis’ (STLA).
Ford pays its dividend quarterly in March, June, September and December.
Ford increased its dividend in this year and last, after pausing the payout in 2020.

Does Ford Stock Pay Dividends?

Ford stock currently pays a quarterly dividend of $0.15. The automaker also occasionally pays special dividends, which are one-time payments that ramp returns up considerably. Ford’s most recent special dividend of $0.65 was paid in March 2023 after the company sold some of its Rivian shares.

Key Ford stock dividend metrics to know are:

Yield: 5.2%
Quarterly payout: $0.15
Payment dates: March, June, September, December
Payout ratio: 59%
Dividend increase track record: Two years (2022 and 2023)

Ford’s dividend metrics look good on paper, especially the yield. But there is added context to know. For one, Ford’s yield is high in part because the stock price has fallen nearly 25% over the last three months.

When F stock reached its 2023 peak of $15.42, the $0.60 annual dividend equated to a yield of 3.9%. The stock has since fallen to the $11.60 range, which pushed the yield up above 5.1%.

Fortunately, the decline is not linked to subpar performance. Thus far, Ford has had a great year. In the first quarter, the company reported 20% revenue growth plus higher profits and cash flow. The second quarter produced 12% revenue growth, which again translated to higher net income and adjusted Ebit.

The most obvious reason for Ford’s value loss is the company’s ongoing labor negotiations with United Auto Workers (UAW). While all the Big Three automakers are facing the same challenge, Ford does have competitors that aren’t unionized. Investors who want automotive exposure can easily look elsewhere to avoid the current UAW complications. Toyota, Honda and some of the best EV stocks are a few of the options.

If it’s dividend income you’re looking for, there are other higher yielding stocks that put cash in their investors pockets much more than Ford. The Forbes Investment team has identified five of those in Five Dividend Stocks To Beat Inflation, a special report from Forbes’ dividend expert, John Dobosz.

UAW Strike And Ford Dividend

Here is a condensed timeline of the UAW strikes:

July 12: Negotiations between the UAW and Ford begin.
July 14: F stock price began falling.
September 14: Labor contracts expired without an agreement.
September 15: Select workers from Ford, GM and Stellantis went on strike.
October 20: UAW President Shawn Fain criticized Ford’s dividend, implying that shareholders get paid at the expense of workers.

In mid-October, JP Morgan Analyst Ryan Brinkman estimated that the strike has cost Ford $517 million. That total will increase by about $44 million each day the strike lingers on.

Will the strike affect Ford’s dividend in the future? In truth, only in the worst-case scenario. If strike costs and concessions require cuts somewhere, Ford will trim share repurchases before suspending or lowering its dividend. A negative change to the dividend policy would be disastrous for Ford’s stock price.

Ford spent $484 million on share repurchases in 2022.

Ford Stock Dividend Yield

Since the fourth quarter of 2021, Ford’s dividend yield has fluctuated from a low of 1.7% to its current high of 5.2%. The yield remained somewhat steady in the mid-4% range from the second half of 2022 through the first half of 2023.

Ford’s dividend yield is higher than GM’s 1.2% yield but lower than Stellantis’ yield of 7.9%. Stellantis owns Chrysler, Dodge, Jeep and Alfa Romeo.

That comparison makes Ford’s yield seem average, but it is more competitive when you take a broader view. The average dividend yield of the S&P 500, for example, is 1.6%. Also, two of the largest companies in the S&P 500, Apple

AAPL
(AAPL) and Microsoft
MSFT
(MSFT), both have yields below 1%. See Forbes’ Apple dividend analysis and Microsoft dividend analysis for more detail.

Unlike GM, Ford and Stellantis are not S&P 500 companies. They are also not comparable in quality to Apple or Microsoft. And, the automotive industry is one that’s quite sensitive to economic cycles. For those reasons, you’d expect investors to demand higher yields from these two automakers. However, a yield that’s five to nearly eight times higher seems to satisfy that demand and then some.

Dividend Payout Ratio

Dividend payout ratio is the total dividend outlay divided by net income. The ratio is a measure of dividend sustainability. A company cannot continue paying a dividend that repeatedly consumes nearly all or more than its earnings.

The threshold for an acceptable payout ratio varies by industry, but investors generally like to see percentages below 80%.

Ford’s dividend payout ratio is 59%. This is the highest payout ratio among the Big Three. GM’s payout percentage is 5% and Stellantis is 22%.

Dividend Growth

Analyzing a company’s dividend growth history can help you evaluate the leadership team’s commitment to shareholder payouts.

Ford’s regular annual dividend of $0.60 in 2023 is $0.04 higher than it was in 2018. That’s roughly a 7% increase.

The growth rate alone doesn’t tell the whole story, however. Ford paused its quarterly dividend in 2020 due to concerns about the Covid-19 pandemic. When the dividend was reinstated at the end of 2021, it was $0.10 per share, $0.04 lower than the previous payout of $0.14.

Ford’s dividend returned to $0.14 per share per quarter in the second half of 2022. It then increased to $0.15 per share in 2023. Special dividends were paid in March 2023 and March 2018.

F Stock Dividend History

The table below outlines Ford’s dividend payments since January 2018. It includes the declared dividend that is payable on December 1, 2023.

Bottom Line

Ford’s dividend today has a nice yield, partly due to a downtrodden stock price. The automaker has demonstrated a commitment to rewarding its shareholders—absent a global pandemic. But there is uncertainty around the ongoing UAW negotiations. What Ford’s final costs on the strike will be and how the new labor agreements will affect margins remain to be seen.

Is Ford a great dividend stock? Probably not, because the auto industry is reactive to macroeconomic factors and requires a ton of capital to remain competitive. Still, Ford could be a good dividend stock when surrounded by other assets that offset those risks.

Ford Stock Dividend FAQs

Is Ford’s Dividend Low?

Ford’s dividend yields more than 5% currently, which is competitive relative to other automakers and the S&P 500. For comparison, GM’s dividend yields 1.2% and Ycharts reports an average dividend yield for the S&P 500 of 1.6%. Stellantis has a higher dividend yield than Ford at 7.9%.

How Often Does Ford Pay A Dividend?

Ford pays a quarterly dividend. In 2022 and 2023, the payment dates were March 1, June 1, September 1 and December 1.

How Many Years Has Ford’s Dividend Grown?

Ford increased its dividend in 2022 and 2023. In 2021, the automaker paid a single quarterly dividend of $0.10. Shareholders fared better in 2022, when they received two quarterly dividends of $0.10 and two quarterly dividends of $0.14.

In 2023 to date, Ford has paid three quarterly dividends of $0.15 plus a special dividend of $0.65. The company has also declared a fourth quarterly dividend of $0.15, to be paid on December 1.