High-dividend stock confronts potential $2 billion tariff penalty, yet its payouts appear secure momentarily
Ford Motor Company (F) continues to be a dividend standout, offering a high yield that catches the eye of income-focused investors. With a recent dividend payment of $0.15 per share, the company yields approximately 6.9%, and an annualized yield ranging from 5.3% to 6.6% depending on the source.
The dividend payout ratio is moderate at about 40-47% of earnings or free cash flow, suggesting the dividend is reasonably well-covered and more likely sustainable. This is bolstered by expected earnings growth of around 96% next year.
Key financial and dividend details supporting Ford as a dividend investment include:
- Dividend yield: roughly 5.3% to 6.9% (forward and trailing)
- Annual dividend per share: ~$0.60 to $0.75, paid quarterly
- Dividend growth: about 12.5% annualized over the last 5 years, with 5 increases in the same period
- Payout ratio: approximately 40-47%, considered sustainable given cash flow coverage and projected EPS growth
However, it's important to note that Ford's market valuation appears lower than fair value estimates. The company is trading at roughly $11.5, compared to a Morningstar fair value estimate near $76. This, coupled with a high uncertainty rating and a 1-star Morningstar stock rating, indicates a significant risk and a challenging turnaround ahead, including ongoing restructuring and scaling of EV operations.
The dividend sustainability also depends on continued execution, given the company's restructuring and long-term shift toward EV markets. For instance, analyst Federico Merendi at Bank of America has a "Buy" rating and a $14 price target for Ford, while Dan Levy of Barclays has a "Hold" rating and an $11 target.
Despite these challenges, Ford's high yield continues to stand out in the sector, making it an attractive option for income seekers. The company's latest moves suggest that its payouts are holding up better than the headlines might suggest. For example, Ford reinstated its full-year outlook following a 5% increase in second-quarter sales.
Moreover, Ford's EV space growth is supported by joint efforts like ChargeScape, which has partnered with PSEG Long Island to optimize charging of over 2,200 Ford EVs. The ChargeScape program utilizes AI to reward drivers for helping regulate grid demand.
In summary, Ford offers a strong current dividend yield backed by improving earnings and manageable payout ratios, making it potentially appealing to dividend investors who can tolerate risk and a turnaround situation. Those seeking purely stable, low-risk dividends might view Ford as more speculative given its ongoing transformation and market uncertainties.
Sources: [1] SimplyWallSt 2025-08-03 [2] Zacks 2025-08-09 [3] Morningstar 2025-07-31 [5] StockAnalysis.com 2025-08-09
- Ford's current financial position, with a high dividend yield and reasonable payout ratios, positions it as an enticing investment for those in the business of finance, especially for investors focused on income.
- As Ford continues to reinstate its financial outlook and partner with companies for EV charging infrastructure like ChargeScape, it seems to be maintaining its dividend sustainability, especially for those in the investing community who are ready to tolerate some risk and support a company undergoing transformation.
