Ford offers a forward dividend yield of 5.22% while trading near $11.50 and delivering share gains below the S&P 500 over the past year. Adjusted free cash flow totaled $1.3 billion in the first half of the year while shareholder payouts for the period were $1.8 billion. A special Class B structure grants the Ford family 40% of voting rights despite owning about 2% of shares and Class B shareholders received $55 million in dividends last year. The company faces forecasted EV losses near $5 billion, stiff U.S. and Chinese EV competition, and obligations to the UAW.
Does Ford Motor Co. ( NYSE: F) have enough cash now and going forward to pay its rich dividend? There should be a great deal of skepticism accorded to a complex and detailed examination of Ford's financials. At risk is its current forward dividend yield of 5.22%, as provided by Yahoo. The figure is so high that it has become a primary reason to own the stock of the deeply troubled automaker.
Ford's share price is not nearly as attractive as the dividend opportunity. In the past year, its shares are up just under 8%, compared to an increase of just over 14% for the S&P 500. The stock trades at $11.50. A new analysis by The Wall Street Journal took into account what Ford calls its "adjusted free cash flow." This number totaled $1.3 billion in the first half of the year. Its payout to shareholders for the period was $1.8 billion.
The analysis also considers the huge payout the Ford family gets. A special Class B shareholder arrangement gives the Ford family 40% voting rights, even though the number of shares they own is only 2% of the total shares outstanding. "Class B shareholders received $55 million in dividend payments last year," the paper reports. Ford faces several major headwinds that could significantly harm its financial future.
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