GuruFocus Research
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Assessing Ford Motor Co's Dividend Sustainability and Growth
Ford Motor Co (NYSE:F) recently announced a dividend of $0.15 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-15. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Ford Motor Co's dividend performance and assess its sustainability.
What Does Ford Motor Co Do?
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Ford Motor Co manufactures automobiles under its Ford and Lincoln brands. In March 2022, the company announced that it will run its combustion engine business, Ford Blue, and its BEV business, Ford Model e, as separate entities within the Ford Motor umbrella. The company has about 13% market share in the United States, approximately 6.5% share in Europe, and around 2.1% share in China including unconsolidated affiliates. We expect market share to increase as inventory improves coming out of the chip shortage. Sales in the U.S. made up about 67% of 2022 total company revenue. Ford has about 173,000 employees, including about 57,000 UAW employees, and is based in Dearborn, Michigan.
A Glimpse at Ford Motor Co's Dividend History
Ford Motor Co has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ford Motor Co's Dividend Yield and Growth
As of today, Ford Motor Co currently has a 12-month trailing dividend yield of 4.69% and a 12-month forward dividend yield of 4.69%. This suggests an expectation of the same dividend payments over the next 12 months. Over the past three years, Ford Motor Co's annual dividend growth rate was 58.70%. Extended to a five-year horizon, this rate decreased to -2.70% per year. And over the past decade, Ford Motor Co's annual dividends per share growth rate stands at -5.40%. Based on Ford Motor Co's dividend yield and five-year growth rate, the 5-year yield on cost of Ford Motor Co stock as of today is approximately 4.09%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Ford Motor Co's dividend payout ratio is 0.30. Ford Motor Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ford Motor Co's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Ford Motor Co's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Ford Motor Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ford Motor Co's revenue has increased by approximately 10.90% per year on average, a rate that outperforms approximately 64.56% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Ford Motor Co's earnings increased by approximately 77.40% per year on average, a rate that outperforms approximately 92.73% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 15.70%, which outperforms approximately 74.69% of global competitors.
Next Steps
For value investors, the dividend metrics of Ford Motor Co reveal a company with a historical commitment to returning value to shareholders through dividends. Despite fluctuations in growth rates, the current payout ratio and profitability rank indicate a balance between distributing earnings and retaining capital for future ventures. With positive growth indicators, Ford Motor Co appears positioned to maintain its dividend payments, making it an attractive option for income-focused portfolios. As the automotive industry evolves with technological advancements and shifts towards electric vehicles, Ford Motor Co's strategic initiatives will be critical in sustaining its competitive edge and, by extension, its dividend payments. Will Ford's dual-focus on traditional combustion engines and electric vehicles drive the company's future growth and support continued dividend generosity? That remains an important consideration for investors. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circ*mstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
