Ford’s 8% Dividend

By Douglas A. McIntyre Published Apr 11, 9:15AM EDT

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If the falling share price pushes its dividend yield to 8%, will Ford Motor Co. (NYSE: F) continue to pay it?
Tariff and consumer headwinds remain a risk.

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Ford’s 8% Dividend — © gopixa / iStock Editorial via Getty Images

Ford Motor Co.’s (NYSE: F | F Price Prediction) forward dividend yield is at 7.83%. The stock is near its 52-week low of $8.44. Today, the shares changed hands at $9.14. A drop to the low would put the yield at 8%. Will Ford continue to pay it?

Recently, Goldman Sachs cut its rating on Ford to Neutral from Buy. Bernstein downgraded the stock to Sell from Hold and lowered his $9.40 price target to $7.00. Part of the reasoning was how tariffs may affect the prices the company may need to charge on cars sold in the United States. If it cannot raise prices, it risks lower margins.

Bernstein pointed out, according to Yahoo, “Ford’s adjusted earnings are expected to fall 41.2% in 2025 and 36.4% in 2026, with free cash flow projection lowered by more than 35%. Combined tariff and consumer headwinds will erase $6.7 billion in automotive free cash flow from 2025 to 2027.” Do these financial challenges mean Ford’s management will decide that the dividend at the current level is too risky to pay?

Ford last cut its dividend at the start of the COVID-19 pandemic. At that point, the payout was zero. About a year later, it increased the dividend to $6 per year. The forward dividend today is $0.75.

Some observers believe management will hold the current dividend because much of the payout goes to the Ford family. That is a thin reason for making a major financial decision. The decision will most likely be made based on the company’s balance sheet and management’s outlook. The public may not get to see the details of that decision.

The anxiety about Ford’s dividend, at least in the short term, is about potential 25% tariffs on goods from Canada and Mexico. This would immediately impact Ford as it would have to increase the price of most of its vehicles by several thousand dollars. That could cripple demand overnight.

It is worth remembering that the average age of an American car on the road is 12 years, the longest in history. If new cars become too expensive, many people will keep their current ones.

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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.