Ford said it would pay a special one-time dividend to investors this year of 25 cents a share. It’s not a recurring dividend increase like the one at GM, but its a bigger and faster bonanza for investors. The extra Ford dividend is worth $992.2 millions and will be paid to investors who own the stock as of record date Jan 29, 2016. Ex-dividend date: Jan 27, 2016.
The automakers are making moves as their shares languish even as their profits grow. Ford and GM shares are down 19.5% and 13.4% respectively over the past 12 months. That’s a bit of a puzzle as profit at the companies are exploding. Ford and General Motors are expected to post 44.9% and 56.7% higher adjusted profit per share in 2015.
Both Ford and GM are significant payers of dividends, both paying out more than $2.4 billion a year in dividend payments. GM currently yields 4.8% – well above the market’s roughly 2% dividend yield – and Ford yields 4.78%.
What I like about Ford special dividend?
- The company is making a huge profit, so it returns the profit to shareholders.
- Sustainability – The company was forced to eliminate its dividend in 2007 as it struggled to survive, and the payments to shareholders weren’t reinstated until the first quarter of 2012.
- Recession sensitive – if the economy tank, so are the number of cars buyers.
- Company left dividend at $0.15 quarterly rate.
- However, special dividend of $0.25 announced.
- Decision seems to reflect business conditions and stock decline.
correction: exdividend date is 1/27/16, record date 1/29/16. Somebody from Reddit brought to to my attention, so I corrected in the article. Thank you for pointing that out.
Full disclosure: I own shares of Ford and I’m long on Ford.