Understanding Ford Motor Stock Splits and Dividend Growth

Ford Motor Company has a history of stock splits, with the first one occurring in 1956. This split resulted in shareholders receiving an additional share for every two shares they owned.

Ford's stock splits have been a way to make the stock more accessible to a wider range of investors. The company has split its stock four times since 1956, with the most recent split happening in 2000.

Each stock split has increased the number of shares outstanding, making the stock more affordable for individual investors. The 2000 split, for example, reduced the par value of the stock from $1 to $0.625.

This has helped to increase the number of Ford shareholders over time.

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Ford Motor Company has a history of stock splits, with the most recent one occurring in 2020, when the company split its stock 4-for-1. This means that for every one share of Ford stock you owned before the split, you now own four.

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Before making any investment decisions, it's essential to consider the company's financial health. Ford's stock split was accompanied by a significant increase in its stock price, which can be a sign of a healthy company.

As of the last split, Ford's market capitalization was around $40 billion, indicating a substantial size and stability in the market.

Ford is a profitable company, with $1.8 billion of net income in the second quarter of 2024.

The company reported a decline in net income compared to the prior year period, but still managed to achieve a net income of $3.2 billion in the first half of 2024.

Ford expects 2024 to be a profitable year, with adjusted earnings before interest and taxes projected to be between $10 billion and $12 billion.

This strong profit comes despite the company's EV division being expected to lose between $5 billion and $5.5 billion in 2024.

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Ford's ability to generate strong profits is a positive sign for investors, and the company's target to return 40% to 50% of its adjusted free cash flow to shareholders is a good indication of its commitment to rewarding its investors.

The company's strong free cash flow has also allowed it to declare a special supplemental dividend in early 2024.

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Ford has a rather spotty track record as a dividend stock, having suspended its dividend in 2006 and not reinstating it until 2012.

The company reinstated its dividend towards the end of 2021 after an almost two-year suspension due to the COVID-19 pandemic's impact on its operations.

In addition to paying its regular dividend, Ford declared a special supplemental dividend in early 2024, driven by its strong free cash flow and target to return 40% to 50% of its adjusted free cash flow to shareholders.

Ford raised its quarterly cash dividend by 12.5 percent in 1991, increasing it to 45 cents a share, the first increase since 1989.

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The increased dividend is payable June 1 to shareholders of record on May 2, and it's a significant improvement from the 40 cents a share paid since the second quarter of 1991.

Ford's board of directors also declared that it would maintain quarterly cash dividends of $1.05 a share on the depositary shares representing the company's Series A cumulative convertible preferred stock.

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Ford Motor's stock performance has been a mixed bag over the years. The company's stock price has fluctuated significantly since its last split in 2019.

In the years leading up to the split, Ford's stock price had been steadily increasing, with a 50% growth rate between 2018 and 2019.

Stock splitting has become a popular trend on Wall Street, and for good reason. Ford's recent announcement of a two-for-one stock split is a great example of this.

The split will increase the number of outstanding Ford shares to 110 million, making it more attractive to small investors. Ford shares have climbed to a high of $117.50, a price that discourages purchases by small investors.

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A sharp eye on auto sales charts led Ford to make this decision. The automaker wants to widen ownership of its stock, as a shareholder is likely to buy the car made by the company in which they have invested.

Stock splitting can be unpredictable, with sudden and sometimes irrational price movements. Ford's stock gained 37 points since June, partly due to strong sales and earnings, but also partly in the hope of a split.

Investors love stock splitters, with some taking a simple pleasure in owning more shares. Others think that a split in itself will increase the value of their holdings, but this is not always the case.

A split can be a sign of management confidence, a kind of ratification by management that the high pre-split price of their company's stock is soundly based on earnings and prospects.

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Ford has a notable stock split history, with six splits completed since its inception.

The company's first stock split occurred in May 1962, when it issued a 2-for-1 split.

Ford has also completed several 3-for-2 splits, including one in December 1983 and another in June 1986.

In addition to these splits, Ford has also issued a 5-for-4 split in May 1977.

A 2-for-1 split was also completed in January 1988.

Lastly, Ford completed a 2-for-1 split in July 1994.

Here is a summary of Ford's stock split history:

Ford's valuation is a major factor to consider when deciding whether to invest in the company's stock. Ford trades at a relatively low valuation, with a forward price-to-earnings (PE) ratio of slightly more than five times in mid-2024.

This is dirt cheap compared to the broader market, making Ford look like a good value investment. The S&P 500's forward PE was more than 22 times, while the Nasdaq-100 fetched almost 28 times forward earnings.

Ford's low valuation is a significant advantage for investors.

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