Shares of Ford (NYSE: F) are down 38% this year as the market considers the deteriorating fundamentals at the car company. In October, U.S. sales plummeted 10%. But the real problem is free cash flow. This year, free cash flow is expected to be half of what it was in 2020. And next year, it'll be half of this year's. In fact, the 2023 figure is projected to be the worst in a decade. For those keeping score at home, that's bad. Very bad. The good news is that Ford can pay for its dividend. This year, Ford is forecast to pay $1.9 billion in dividends, well below the $7.7 billion in free cash flow expected for this year and even the $3.7 billion anticipated for next year. But Ford slammed the brakes on its dividend in 2020. After paying a dividend every quarter since 2012, management eliminated the dividend for six quarters starting in 2020. That history of abolishing the dividend means management won't hesitate to do it again if times get tough. |
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