Ford's Dividend Outlook Amidst Ongoing Financial Challenges

Ford Motor Company faces scrutiny regarding its ability to maintain dividends. Despite a 6.2% yield, persistent share price decline and previous financial struggles raise concerns over future payouts.

Date: 10-03-2025

AI Rating: 5

Dividend-Paying Ability
Ford has achieved a notable dividend yield of 6.2%, significantly higher than the S&P 500 index's 1.3%. However, such a high yield could be indicative of potential risks, including the likelihood of a dividend cut. Indeed, Ford's share prices have declined over 22% in the past year, contrasting sharply with the S&P 500's growth of over 12% within the same period.

To evaluate Ford's ability to sustain its dividend payments, an examination of its Free Cash Flow (FCF) is necessary. Ford generated an FCF of $6.7 billion while allocating $3.1 billion for dividend payments. This suggests there is a healthy cushion for continuing dividend payouts.

Currently, Ford offers a quarterly dividend of $0.15 per share, which sums to $0.60 per share annually. With the stock priced at $9.90 (as of March 7), a target of $1,000 in dividends would require owning 1,667 shares, totaling an investment of approximately $16,500. Although Ford has also distributed special dividends of $0.65 in 2023 and $0.18 in 2024, these are unpredictable and thus not factored into regular dividend calculations.

Investment Consideration
It is paramount for potential investors to weigh the value of investing in Ford Motor Company against alternatives. According to recent analysts, Ford was not included among the top 10 stocks for potential investment, suggesting uncertainty about its future performance compared to other market opportunities.

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