Ford Becomes a Huge Dividend Play

By Douglas A. McIntyre Published Mar 5, 9:15AM EST

Quick Read

Ford Motor Co. (NYSE: F) has a healthy dividend yield.
For those who gamble new tariffs will end quickly, that dividend is almost certainly safe.

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Ford Becomes a Huge Dividend Play — © sbeebe / Flickr

No matter what people think of Ford Motor Co.’s (NYSE: F | F Price Prediction) stock price or its prospects, it has among the higher yields of any stock in the S&P 500. Depending on the method of calculation, that yield is between 6.5% and nearly 8%. It compares favorably to a consistent dividend stock, Altria Group Inc. (NYSE: MO), which has a payout of 7.3%.

Ford can keep paying the dividend for some time, if not permanently. The tipping point at which a cut might be necessary is if new tariffs, as high as 25% on imports from Mexico and Canada, begin to hammer its bottom line.

As of its most recent earnings announcement, Ford had almost $23 billion of cash on its balance sheet. That is down only slightly from the year before. Cash flow from operations was $3 billion in the final quarter of the year.

Then there is the Ford family, which counts on the dividend for some of its ongoing wealth. Many of these shares have voting rights beyond the common stock. The Motley Fool points out, “Investors also have to consider the Ford family, which is well known for loving their dividends.”

Tariffs may bite into Ford’s earnings. However, many experts believe that tariffs cannot stay in place too long, unless President Trump wants to badly damage the entire U.S. economy. For those who gamble the tariffs will end quickly, the Ford dividend is almost certainly safe.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.