Well Rounded Investor

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Ford to give special dividend $0.25/share 

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Ford said it would pay a special one-time dividend to investors this year of 25 cents a share. It’s not a recurring dividend increase like the one at GM, but its a bigger and faster bonanza for investors. The extra Ford dividend is worth $992.2 millions and will be paid to investors who own the stock as of record date Jan 29, 2016. Ex-dividend date: Jan 27, 2016. 
The automakers are making moves as their shares languish even as their profits grow. Ford and GM shares are down 19.5% and 13.4% respectively over the past 12 months. That’s a bit of a puzzle as profit at the companies are exploding. Ford and General Motors are expected to post 44.9% and 56.7% higher adjusted profit per share in 2015.
Both Ford and GM are significant payers of dividends, both paying out more than $2.4 billion a year in dividend payments. GM currently yields 4.8% – well above the market’s roughly 2% dividend yield – and Ford yields 4.78%.

What I like about Ford special dividend?

  1. The company is making a huge profit, so it returns the profit to shareholders.
  2. Sustainability – The company was forced to eliminate its dividend in 2007 as it struggled to survive, and the payments to shareholders weren’t reinstated until the first quarter of 2012.
  3. Recession sensitive – if the economy tank, so are the number of cars buyers.

Summary:

  • Company left dividend at $0.15 quarterly rate.
  • However, special dividend of $0.25 announced.
  • Decision seems to reflect business conditions and stock decline.

correction: exdividend date is 1/27/16, record date 1/29/16. Somebody from Reddit brought to to my attention, so I corrected in the article. Thank you for pointing that out.

Full disclosure: I own shares of Ford and I’m long on Ford.

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2 comments on “Ford to give special dividend $0.25/share 

  1. B
    January 16, 2016

    The special dividend is certainly welcoming.

    I was just watching the news on Friday on how the auto industry is dropping heavily in Europe surprised to see that coming in from Ford.

    Like

    • Vivianne
      January 16, 2016

      VW rigged the clean energy test result has hurt EU’s reputation.
      EU and China’s economies are slowing down.
      But here in the US, the economy is fully recovered, people will continue to buy cars.

      Like

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This entry was posted on January 13, 2016 by in Best post.

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