Ford Becomes a Huge Dividend Play

No matter what people think of Ford Motor Co.’s (NYSE: F) stock price or its prospects, it has among the higher yields of any stock in the S&P 500. Depending on the method of calculation, that yield is between 6.5% and nearly 8%. It compares favorably to a consistent dividend stock, Altria Group Inc. (NYSE: MO), which has a payout of 7.3%.

Ford Motor Co. (NYSE: F) has a healthy dividend yield.

For those who gamble new tariffs will end quickly, that dividend is almost certainly safe.

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Ford can keep paying the dividend for some time, if not permanently. The tipping point at which a cut might be necessary is if new tariffs, as high as 25% on imports from Mexico and Canada, begin to hammer its bottom line.

As of its most recent earnings announcement, Ford had almost $23 billion of cash on its balance sheet. That is down only slightly from the year before. Cash flow from operations was $3 billion in the final quarter of the year.

Then there is the Ford family, which counts on the dividend for some of its ongoing wealth. Many of these shares have voting rights beyond the common stock. The Motley Fool points out, “Investors also have to consider the Ford family, which is well known for loving their dividends.”

Tariffs may bite into Ford’s earnings. However, many experts believe that tariffs cannot stay in place too long, unless President Trump wants to badly damage the entire U.S. economy. For those who gamble the tariffs will end quickly, the Ford dividend is almost certainly safe.

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