Ford started paying dividends again in 2012 after suspending them in 2006 when the company was close to bankruptcy. At the hight of the global financial crises, Ford famously supported competitors General Motors and Chrysler as they requested government bailout loans. Ford declined the same, but requested a $9 billion credit line. The company returned to profitability in 2009 and Ford's corporate bonds were upgraded from junk to investment grade in 2012.
The company pays quarterly dividends of 15¢ per share in the months of January, April, July and October. At the current price of $14.09, the stock yields 4.26%.
Ford is the 14th stock that I'm transferring from my portfolio at Scottrade to DivGro.
Previously, I've transferred the following stocks:
1.
| Coca Cola (NYSE:KO) |
8.
| Pfizer (NYSE:PFE) |
2.
| Proctor & Gamble (NYSE:PG) |
9.
| Texas Instruments (NASDAQ:TXN) |
3.
| Kimberly-Clark (NYSE:KMB) |
10.
| Union Pacific (NYSE:UNP) |
4.
| AbbView (NYSE:ABBV) |
11.
| Gilead Sciences (NASDAQ:GILD) |
5.
| Dominion Resources (NYSE:D) |
12.
| Reynolds American (NYSE:RAI) |
6.
| W.P. Carey (NYSE:WPC) |
13.
| Dr Pepper Snapple (NYSE:DPS) |
| 7. | Toronto-Dominion Bank (NYSE:TD) |
In the process, I've added $1,231.56 to DivGro's projected annual dividend income and $1,696.50 in past dividends to DivGro's total dividend tally.
TRANSACTIONS
| 2014-11-14 | Bought: 170 shares of F at $15.14 per share: | $ | 2,573.47 |
| 2015-03-02 | Dividend on 170 shares at 15¢ per share: | $ | 25.50 |
| 2015-06-01 | Dividend on 170 shares at 15¢ per share: | $ | 25.50 |
| 2015-09-01 | Dividend on 170 shares at 15¢ per share: | $ | 25.50 |
| 2015-12-01 | Dividend on 170 shares at 15¢ per share: | $ | 25.50 |
| Total Capital Invested | $ | 2,573.47 | |
| Total Dividends Received: | $ | 102.00 |
With this transfer, DivGro's projected annual dividend income increases by $102.00.
The following chart shows a 2-year history of F's share price and indicates when I bought shares. So far, Ford's performance has been disappointing. My investment is down about 3% (also 3% annualized).
Source: Scottrade
Why Ford?
Here are some reasons I like Ford and why I decided to transfer the shares to DivGro:
- Ford yields a solid 4.26% and expectations are that the company will continue raising the dividend. The next dividend increase is expected in January.
- With a payout ratio of 50% based on adjusted earnings, Ford can easily afford a dividend increase without overextending itself.
- The company has about $22 million in cash on its balance sheet, representing 39% of Ford's market cap.
- The company has received an investment-grade credit rating from all major ratings agencies.
- Ford's use of common vehicle platforms is improving economies of scale. By 2016, the company expects most of its global production to come from 9 platforms, down from 12 in 2015 and 27 in 2007. This will allow Ford to switch production faster to meet changing demand, cutting costs dramatically.
Thanks for reading! Please share your thoughts on Ford as a dividend growth stock below.
Nice. I've had Ford in my portfolio for quite awhile now and continue to add to that position often. I wish you the best.
ReplyDeleteRespecfully,
Dennis McCain
Ford surprised by not raising its dividend, instead declaring a special dividend. The stock got hammered and is trading below $12 now -- perhaps a great time to add shares!
DeleteGlad you posted this...I was looking at F tonight as my next addition to my portfolio. Looks more attractive after today's pullback.
ReplyDeleteYou're right. Ford declares a $1 billion special dividend instead of raising the regular dividend, and the market panic sells. Looks like a bargain now!
Delete