The Only Reason to Own Ford Stock Right Now

Core Viewpoint - Ford Motor Company has faced significant challenges and a decline in stock price over the past decade, yet its valuable dividend remains a compelling reason for investors to hold the stock [1][6]. Group 1: Dividend Importance - The long-term wealth-creating power of dividends is highlighted, especially when reinvested, showing a stark difference in total value returned by Ford when including dividends compared to stock price gains alone [2]. - Ford is committed to returning 40% to 50% of adjusted free cash flow to shareholders, primarily through dividends rather than share buybacks, indicating a strong focus on providing passive income to investors [3]. - The quarterly dividend of $0.15 offers a robust yield of 5.36%, with additional supplemental dividends expected over time, as evidenced by past payouts of $0.18 and $0.65 per share [5]. Group 2: Financial Strength - Ford's operating cash flow in the second quarter was $5.5 billion, supported by a strong balance sheet with nearly $27 billion in cash and approximately $45 billion in liquidity, reinforcing its ability to sustain dividends [3]. - The Ford family backs the dividend, holding a separate class of shares with 40% voting power, ensuring that the company prioritizes dividend payments over share buybacks, which would not benefit the family [4]. Group 3: Challenges and Outlook - Despite a rebound from the Great Recession and record profits, Ford faces ongoing challenges, including struggles in the Chinese market and significant investments in electric vehicle development [6]. - The company must improve production efficiency and reduce vehicle complexity to address these challenges, yet the high-yield dividend remains a consistent reason for ownership [6].