The carmaker’s cash payouts aren’t as predictable as most investors would like them to be.
You may like Ford Motor Company‘s (F -0.37%) above-average dividend yield. As veteran investors can attest, however, there’s more to the story. Is the dividend growing? Can the company afford to continue paying it? Some dividend stocks aren’t as attractive once put under scrutiny.
With that as the backdrop, here’s a look at how much the automobile manufacturer is likely to pay out in dividends this year, and what it means for shareholders.
Ford Motor’s dividend snapshot
Ford was once a titan, but competitors, circumstances, and time finally caught up with the automaker in the 1990s. That’s when the carmaker’s dividend began to shrink more than grow, particularly during periods of economic weakness.
F Dividend data by YCharts
To its credit, Ford has made efforts to supplement ho-hum quarterly payments with the occasional “special dividend.” The company’s regular quarterly payout of $0.15 per share plus February’s special dividend of $0.18 per share puts it on track to dish out $0.78 worth of per-share dividend payments in 2024, translating into a dividend yield of 7.2%.
That’s going to cost the automaker on the order of $3.7 billion, by the way, or roughly two-thirds of its likely 2024 net income based on generally accepted accounting principles (GAAP). On a per-share basis, it’s a little less than half the earnings of $1.93 per share that analysts expect this year.
Not particularly great for any investing goal
There’s the rub for interested investors. A huge chunk of this company’s profits are earmarked for dividends rather than reinvestment.
Then again, what growth opportunity merits more reinvestment? The company is sitting on nearly $25 billion worth of cash it’s struggling to find something more constructive to do with. A lack of spendable cash isn’t an issue.
Whatever its fiscal situation is, Ford Motor isn’t a top pick for any investor in need of predictable or growing dividend income. The automobile business itself also faces only modest growth prospects for the foreseeable future. There are far better options out there regardless of your investment goal.
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.
