Investing

Ford's (NYSE:F) Dividend Is on the Chopping Block

Austin Smith

Published: October 17, 2024 7:30 am

Last Updated: October 17, 2024 5:22 pm

Key Points

• • Ford’s stock has stumbled, and dividend cuts are on the horizon
  • Chinese EVs and trouble in China increase the pressure for Ford
  • Dividends are an excellent source of income fore retirees
  • Speak with a financial advisor today to see if you need more dividends in your portfolio (it’s free)

Watch the Video

Edited Video Transcript:

[00:00:00] Doug McIntyre: Jim Farley, the current CEO of Ford, uh, got his job in October, 2020.

[00:00:09] Lee Jackson: You mean the cousin of Chris Farley, the deceased actor?

[00:00:12] Doug McIntyre: They, they apparently are related. They are. What’s happened is, is that, you know, if Ford sells down, not very much, like a couple of bucks, the stock is going to be back to where it was when he became the CEO.

[00:00:29] Doug McIntyre: Now, It is absolutely humiliating. Ford continues to humiliate itself. I don’t even know how they can look themselves in the mirror. This guy may have been there for that length of period of time, and basically the shareholders, except for a dividend, which is because the Ford family, I think, needs the money.

[00:00:51] Doug McIntyre: Um, it’s, it’s, it’s awful.

[00:00:55] Lee Jackson: It’s awful.

[00:00:59] Lee Jackson: I don’t, you know, I think one thing that Ford shareholders should be a little bit concerned about, and especially considering how things are going with their EV structure, there’s an outside chance that they may start to get nudged to cut that dividend. And yeah,

[00:01:20] Doug McIntyre: 570

[00:01:23] Lee Jackson: now, you know, it’s a sweet dividend now that we’ve talked about it.

[00:01:26] Lee Jackson: Huh. But if they cut the dividend, they’ll cut the stock in half.

[00:01:31] Doug McIntyre: Yep. And here, if you’re Ford, the noose is tightening on you. There was a time when if you were a European or American car company, China was a slot machine. You went over there, you had to do a JV with the Chinese company. That was part of the rules, but, um, it was sweet because, you know, China 10 years ago went from being the second largest car market in the world to the first largest way out grew the United States.

[00:02:02] Doug McIntyre: So I’ve got one of these JVs in China and I’m saying, wow, this is the greatest GM now apparently is thinking of just exiting that market completely. Just walking away from what was one of the best deals they ever had. Ford, Ford may stop making money in China. They may have problems in the United States with EVs and that may last for a while.

[00:02:26] Doug McIntyre: And then there’s always the specter of the fact that the Chinese are going to get into the United States one way or the other with these 12, 000 reviews. It’s going to happen. They’ve got tariffs up. I know now it’s a hundred percent. Maybe they’ll make them in Mexico and use NAFTA to get them across the border.

[00:02:45] Doug McIntyre: But I’m telling you right now, Ford is besieged on all sides.

[00:02:51] Lee Jackson: Yeah. And there’s not really, there’s not a lot of ways out of this, but again, and this hit me when I was, I was writing a story for 24 seven wall street and then I was putting Ford in there, but I had a little caveat to the reader. It was like.

[00:03:06] Lee Jackson: south, they may have to c there’s a lot of outstand it’s a big float for Ford in every quarter. While l family probably is a big Uh, it’s going to weigh on earnings and you know, at this juncture, even if they cut it, if they cut it 50%, it’s still going to yield two and a half to 75. And for a lot of people, they guess they would be okay with that.

[00:03:34] Lee Jackson: But a lot of people will just absolutely flush the stock if they cut it that

[00:03:38] Doug McIntyre: much. Well, so I’ve got two takeaways here. Number one, it doesn’t matter who runs for it. Farley, I think makes about 20 million a year. Let him have it. He’s a car enthusiast. Sure. You know, let him, let him keep the job. Nobody else is going to, the Ford family has proven they’re awful at choosing CEOs.

[00:04:00] Doug McIntyre: So he gets to keep his job. Number one, number two, um. I would look at shorting the stock for the reason you’re talking about. And that is, if they cut that dividend, it’s going to be like the elevator drop 20 stories.

[00:04:18] Lee Jackson: Yeah, it won’t be good. It won’t be good. And as we’ve seen with other companies, Um, sometimes you can fight your way out of it.

[00:04:26] Lee Jackson: I mean, AT& T had to slash their dividend, but the stock got hit so hard that it’s still above five percent, you know, and it’s gone basically sideways for a year. And, um, while they survive, you know, AT& T will survive because they’ve You know, they, they finally got rid of DirecTV and they, they’ve gotten rid of some things that are, that are making their own Warner.

[00:04:46] Lee Jackson: They got

[00:04:47] Doug McIntyre: rid, they got rid of Warner Media and, you know, back over it. Discovery. Got it. And at stake their ship to the bottom of the

[00:04:56] Lee Jackson: ocean with all the other issues. I’m not a big, you know, although I ranked them somewhat higher than Stellantis, but not a month.