Ford Motor: Ex-Dividend Date Approaches – What Investors Need to Know

The Ford Motor Company stock is approaching its ex-dividend date, which is in four days on August 7th. This means that investors who wish to be entitled to the upcoming dividend should purchase their shares before this date. The dividend payout of US$0.15 per share will then occur on September 3rd. Ford Motor's dividend yield is currently approximately 7.3% based on a share price of US$10.69. Over the past twelve months, the company has distributed a total of US$0.78 per share to shareholders. Dividends make a significant contribution to investors' long-term returns—provided they are consistently paid out. An important aspect in assessing the sustainability of dividends is the payout ratio. Ford Motor paid out 62% of its earnings as dividends last year, which is a standard ratio for many companies. Fortunately, the company only paid out 10% of its free cash flow as dividends, indicating a solid financial foundation. The fact that both earnings and cash flow cover the dividend suggests that the payout is sustainable as long as earnings do not drastically decline. However, it is important to note that Ford Motor's earnings have largely stagnated over the past five years. While this means they have not fallen, the observed lower growth potential may make investors somewhat cautious. What about dividend growth? Ford Motor has recorded an average annual increase in dividends of 6.9% over the last ten years. This is a positive sign, although the flat growth in earnings does warrant some caution. The question remains: Is Ford Motor an attractive dividend stock? Despite some positive characteristics and the fact that dividend payouts remain within reasonable limits, caution is advised. The company must continue to deliver stable results to secure future dividends. Before investors invest in Ford Motor, they should be aware of the risks. There are three warning signals to consider before making an investment. In summary, while Ford Motor offers an enticing dividend, it is worthwhile to keep an eye on the risks and limited growth prospects.