While 2022 was a difficult year for the company, the last two years have been surprisingly good given the circumstances. After Ford reported -$13 million in free cash flow in 2022, its supply chain issues eased up last year, and its free cash flow jumped back up to $6.7 billion. On top of that, forward estimates predict that free cash flow will increase by an additional 4.6% this year. Unfortunately, Ford's free cash flow remains well below its 2020 figure of $18.5 billion, so we'll have to knock the stock's dividend safety rating down a peg. Next, let's look at how much the company is paying out in dividends. As a reminder, the dividend payout ratio tells us what percentage of a company's cash flow it is returning to shareholders. Our golden number is 75% or below. Ford snuck just under that benchmark at 74.8% in 2023... But 2024's estimate is significantly lower at 34.8%. The company paid a special dividend in both years, but neither payout ratio crossed our threshold, so there is no reason to worry. Finally, we have to examine Ford's dividend history to see how often it has raised or cut its payout over the past 10 years. Is its track record strong enough to overcome its stagnant cash flow? |
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