Investor’s Insight: Ford Motor Company’s Unique Blend of Value and Dividend Yield An Investor’s Take: Unlocking the Potential of Ford Motor Company’s Stock

Photo of author

By Ronald Tech

If you’re going through the post-holiday season with $1,000 burning a hole in your pocket and are considering entering the stock market waters, then Ford Motor Company (NYSE: F) might catch your eye.

Trading at a modest price-to-earnings ratio of 7 and offering a dividend yield exceeding 5%, Ford presents an attractive proposition for those seeking value and long-term growth.

The Road Ahead

As the automotive industry hurtles toward a future dominated by electric vehicles and advanced autonomous technology, it faces significant financial hurdles. Ford, unlike some competitors, has shown prudence with investments in driverless technology, a decision that has paid off compared to rivals like General Motors’ troubles with Cruise.

By focusing on enhancing Level 2 and 3 driverless systems, Ford is strategically positioning itself to capitalize on more profitable options and features for its vehicles, steering clear of the financial quagmire plaguing its peers.

Bar chart showing Ford's EV unit projected to reach 8% margin by end of 2026.

Image source: Ford Motor Company.

Driving Away Losses

A significant driver for Ford’s future growth lies in the turnaround of its Model e business unit. Although Ford foresees a substantial $4.5 billion loss in 2023 alone, this is viewed as a short-term setback, with management eyeing profitability for the Model e unit by the end of 2026, driven by improved scale and design enhancements.

The recent record-breaking fourth-quarter EV sales, especially the soaring demand for F-150 Lightning and F-150 Hybrid, underscore Ford’s potential to transition its supremacy in the traditional truck market to the burgeoning EV segment, which promises to be a pillar of profits.

The Dividend Differential

For investors eyeing Ford as an investment opportunity, the company’s impressive history of delivering supplemental and special dividends sets it apart. Coupled with a consistent dividend yield that surpasses stock price gains in the long term, Ford’s beating heart lies in its robust and reliable dividend streams.

See also  Analysing ChargePoint's Stock An In-Depth Look at ChargePoint's Stock Performance

These factors, along with the company’s shift from bleeding cash to forecasting profits in its EV segment and a prudent pivot away from costly driverless technology development, make Ford an intriguing investment proposition. Additionally, the current 5% dividend yield can serve as a tangible reward while the company focuses on enhancing its bottom line.

Is Ford Motor Company the Right Investment for You?

While Ford presents a compelling case for investment, it’s essential to weigh your options. The Motley Fool Stock Advisor team has identified the 10 best stocks for investors to consider, of which Ford wasn’t one. These handpicked stocks offer significant potential for robust returns, ensuring investors remain well-informed and empowered.

Stock Advisor provides a comprehensive guide to building a successful portfolio, offering regular updates and two new stock recommendations monthly. Since 2002, the Stock Advisor service has outperformed the S&P 500 return by threefold*.

*Stock Advisor returns as of January 8, 2024

Disclosure: The writer may have positions in the discussed companies. The writer may also recommend specific options on the discussed companies. Please be aware of any potential conflicts of interest.