- Ford Motor Co.’s recent third quarter results and the promotion of Jim Farley to CEO have underscored the question of when the automaker’s dividend will be restored.
- Farley signaled that capital outlays to finance migration to electrification are significant, reflected in the rollout of the Mustang Mach-E in North America and introduction of the E-Transit.
- Farley declined to discuss dividend resumption with analysts, postponing the subject until the spring. If Ford’s financial performance is decent through March, the automaker could distribute a token amount.
- Several positive factors potentially bear on cash flow. But investors should be prepared for a dividend drought of unknown duration, as capital pressures and economic weakness could be substantial.
- Looking for more investing ideas like this one? Get them exclusively at Auto/Mobility Investors. Get started today »
Ford Motor Company’s (F) solid third quarter earnings report has raised hopes among investors that the automaker is back on track, beating analyst estimates, after a calamitous pandemic-induced shutdown during the second quarter that produced a pre-tax quarterly loss of $1.9 billion.
Automotive revenue and adjusted earnings per share in the third quarter were well ahead of expectations, as pent-up demand for vehicles spurred retail sales by dealers who were ordering every vehicle that Ford factories could manufacture. Strong demand meant that Ford was able to keep retail financial incentives in check, thus strengthening net pricing.
Ford is in the midst of a multi-year turnaround, the point of which is to reduce warranty costs, increase market share and make its operations – especially vehicle development and manufacturing – more efficient and competitive.
Ford Share Prices Battered by Pandemic
Ford share prices – battered during the first weeks of the pandemic – are up 65% over the past six months, despite no clear signals when the suspended dividend would be resumed. Asked about the dividend during the third quarter call with analysts, newly-promoted CEO Jim Farley dodged the question.
