Exploring Ford Motor Company‘s impressive dividend yield attracts many investors. However, a closer examination uncovers underlying complexities. Is the dividend on a growth trajectory? Can the company sustain its payout commitment, or are cracks starting to show?
Against this backdrop, let’s delve into Ford Motor Company’s anticipated dividend distribution for this year and the implications for its shareholders.
The Evolution of Ford Motor’s Dividend
In its heyday, Ford stood as a titanic figure. Alas, with competitors nipping at its heels, the automaker’s dividend began to stagnate in the 1990s, especially during economic downturns.
Explore Ford’s dividend data presented by YCharts
Acknowledging its situation, Ford sought to enliven its regular quarterly disbursements with occasional “special dividends.” Combining the standard $0.15 per share quarterly payout with February’s $0.18 per share special dividend points to an estimated $0.78 per share in dividend payments for 2024, yielding 7.2%.
By the way, this move is slated to set the automaker back approximately $3.7 billion – nearly two-thirds of its anticipated 2024 net income under prevailing Generally Accepted Accounting Principles (GAAP). On a per-share basis, this outlay is slightly less than half of the forecasted $1.93 per share earnings for the current year.
Drawing the Line on Dividend Prospects
Here’s the crux for potential investors—Ford Motor directs a substantial portion of its profits to dividends rather than reinvestment.
However, what avenues for growth warrant increased reinvestment? The company grapples with nearly $25 billion in idle cash, struggling to identify fruitful avenues for utilization. Cash availability isn’t the roadblock.
Regardless of Ford Motor’s financial stance, it fails to emerge as a prime choice for investors seeking stable or escalating dividend streams. Moreover, the automotive industry itself anticipates only moderate growth prospects in the foreseeable future. Superior investment alternatives abound, tailored to diverse investment objectives.
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