You may also like Ford Motor Company‘S (NYSE: F) above-average dividend yield. But as seasoned investors can attest, there’s more to it than that. Is the dividend growing? Can the company afford to keep paying it? Some dividend stocks aren’t all that attractive when they’re scrutinized.
Against this backdrop, here’s a look at how much dividend the automaker is likely to pay out this year and what that means for shareholders.
Ford Motor’s Dividend Overview
Ford was once a titan, but competitors, circumstances and the times caught up with the automaker in the 1990s. That’s when the automaker’s dividend began to shrink rather than grow, especially during periods of economic weakness.
Ford has made an effort to supplement the boring quarterly payments with an occasional “special dividend.” The company’s regular quarterly payment of $0.15 per share plus With the special dividend of $0.18 per share in February, the company is on track to pay a dividend of $0.78 per share in 2024, representing a dividend yield of 7.2%.
That will cost the automaker about $3.7 billion, or about two-thirds of its likely 2024 net income based on generally accepted accounting principles (GAAP). On a per-share basis, it’s just under half of the $1.93 per-share profit that analysts are expecting this year.
Not exactly great for an investment purpose
Therein lies the problem for interested investors. A large portion of this company’s profits are earmarked for dividends rather than reinvestment.
But then again, what growth opportunity deserves more reinvestment? The company is sitting on nearly $25 billion in cash and struggling to find something more constructive to do with. Lack of disposable income isn’t a problem.
Regardless of its financial situation, Ford Motor is not a top choice for investors looking for predictable or growing dividend income. The auto industry itself also has only modest growth prospects for the foreseeable future. There are much better options, regardless of your investment goals.
Should You Invest $1,000 in Ford Motor Company Now?
Before you buy Ford Motor Company stock, you should consider the following:
The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and Ford Motor Company wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the years to come.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $710,860!*
Stock Advisor offers investors an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns as of September 16, 2024
James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
How Much Will Ford Motor Company Pay Out in Dividends This Year? was originally published by The Motley Fool
