Ford Motor Company: An Icon with Challenges, but a Stable Dividend

Ford Motor Company, a name long synonymous with automotive history, has not brought riches to investors in recent years. While the S&P 500 has risen by 176% over the past decade, Ford's stock price has fallen by 36%. Nonetheless, there is one important reason to continue holding Ford shares: the company's valuable dividend. Ford's dividend, supported by special distributions and family-run reserves, has proven to be a wealth generator in the long term. Income-oriented investors especially appreciate the power of reinvested dividends. When considering the total value returned by Ford through dividends as compared to pure stock gains, a significant difference emerges. Ford boasts impressive financial metrics. Operating cash flow in the second quarter amounted to an impressive $5.5 billion, while the balance sheet shows nearly $27 billion in cash and around $45 billion in liquidity. The company is committed to returning 40% to 50% of adjusted free cash flow (FCF) to shareholders—primarily in the form of dividends. Ford's strong dividend policy is also supported by the Ford family, which holds a special class of shares with 40% voting rights and dividend preferences. The family values the income derived from dividends and will likely continue to ensure that value is returned in this way. This dividend policy ensures that payouts are rarely reduced, except under extreme circumstances. An example of the attractiveness of Ford's payouts is the recently announced quarterly dividend of $0.15, equating to an attractive yield of 5.36%. Additionally, investors can regularly expect special dividends. Despite these robust dividend distributions, significant challenges remain. In particular, Ford is struggling in China and is investing billions in the development of its electric vehicle division. The company needs to reduce the complexity of its vehicles, increase production efficiency, and cut costs. Despite these hurdles, the chief reason to own Ford shares remains: the profitable, wealth-generating dividend. However, before investing in Ford shares, you should know that Motley Fool Stock Advisor's analyst team currently sees better investment opportunities that may promise high returns. The success of previous recommendations like Nvidia shows that selecting the right stocks can yield significant gains.