Ford Motor Co. (NYSE: F) just continues to impress. The company just announced that it plans to raise its quarterly dividend to $0.125 per share, up 25% from the prior $0.10 payout from 2013. Ford also said that it continues to target a regular and growing dividend that is sustainable over an economic cycle. This will only put more pressure on General Motors Co. (NYSE: GM) to act.
Thursday’s news is on the heels of the news that Alan Mulally will be staying on through at least the end of 2014. Ford said that this dividend hike reflects its strong 2013 performance and plans going forward, and it is consistent with the company’s One Ford goal of delivering profitable growth for all stakeholders.
The first-quarter dividend is payable on March 3, 2014, to shareholders of record at the close of business on Jan. 31, 2014. We would also point out that this is the second dividend hike in the past two years.
Ford continues to be focused on financing its One Ford plan. Through the first three-quarters of 2013, Ford showed that it increased its liquidity position by $3 billion. It has also extended its number of consecutive quarters of positive Automotive operating-related cash flow to 14 quarters.
Based upon a closing bell price of $15.54, Ford’s new dividend yield comes to a high 3.2%. GM still yields zero, though it has telegraphed that the dividend could return in 2014. GM’s CEO said that there is more bandwidth to pay a dividend as recently as mid-December.
Ford’s $0.50 annualized payout compares to normalized earnings expectations of $1.85 per share expected in 2014. GM’s normalized earnings are expected to be $4.65 per share in 2014.
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