Ford Motor Company is one of the more talked-about names among income investors right now, mostly because of its yield.
At a share price of $13.37, the automobile stock pays an annual dividend of $0.60 per share, split into quarterly checks of $0.15.
That works out to a dividend yield of roughly 4.5%, well above the S&P 500 average and above what most blue-chip dividend stocks pay today.
Dividend income is not just a bonus for shareholders. It can be a core part of how a portfolio grows over time.
“Dividend payments offer a cushion to offset price declines,” said Sam Stovall, chief investment strategist at CFRA Research, in comments to CNBC.
Merrill and Bank of America Private Bank investment strategist Kirsten Cabacungan made a similar point, noting that investors should weigh both price gains and dividend income when thinking about total return.
“Dividend-focused investing has historically demonstrated the ability to help lower volatility and buffer losses during market drawdowns,” Cabacungan explained.
So if the goal is $500 a year in dividend income from Ford stock, how much money do you need to invest, and is Ford a smart way to get there?
Ford stock: how many shares for $500 a year
The math is simple once you know the dividend rate. Ford pays $0.60 per share every year. To collect $500 in annual dividends, an investor would need to own about 834 shares.
At the current price of $13.37 a share, buying 834 shares of Ford stock would cost roughly $11,150.
That is a meaningful amount of capital to tie up in a single stock just for dividend income, so it is worth understanding what you would be buying before committing that kind of money to one top dividend stock pick.
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Key dividend ratios for Ford stock
Here are the numbers that matter most when sizing up Ford as a dividend stock:
- Share price: $13.37
- Annual dividend per share: $0.60
- Quarterly dividend per share: $0.15
- Dividend yield: About 4.5%
- Shares needed for $500 a year: 834
- Approximate cost to reach $500 a year: $11,150
- Dividend history: Suspended twice in the past two decades
Ford has cut its dividend before
A high yield can be a warning sign as much as a reward, and Ford’s dividend history backs that up.
The automaker eliminated its dividend from 2006 to 2012, then suspended it again for nearly two years after the pandemic hit in 2020, according to Motley Fool research.
Related: Jefferies strongly resets Ford stock target
Compared to dividend growth stocks, companies that significantly cut dividends have trailed the broader markets over the last 50 years.
Ford is not alone in offering a tempting yield that comes with real risk.
Nike’s dividend yield has also climbed into the mid-4% range this year, but only because its share price has fallen sharply.
Ford stock has badly lagged the market
The bigger issue for long-term investors is total return. Over the past decade, Ford’s total return, including reinvested dividends, is around 85%, grossly trailing the S&P 500 index returns, which are well over 300%.
Stretch the timeline out further, and the gap does not close. Over the past 20 years, Ford has returned 200%, compared with the S&P 500’s 724%, according to Y-Charts data.
In other words, an investor who bought and held Ford stock across the past 10-, 20-, or 30-year periods would have ended up with meaningfully less money than someone who simply owned an S&P 500 index fund, even after collecting Ford’s dividend checks along the way.
A better strategy would be to identify Dividend Kings or Dividend Aristocrats that have grown payouts across economic cycles, which translates to predictable cash flow and resilience.
Bloomberg / Getty Images
Is Ford stock worth it for the dividend?
Ford’s yield is attractive, and the math on reaching $500 a year is straightforward: about 834 shares, or roughly $11,150 at current prices.
But the stock’s long history of weak returns, combined with two dividend suspensions in the past 20 years, makes it a higher-risk way to generate that income.
Investors chasing a 4%+ yield may want to weigh Ford against dividend stocks with steadier payout histories and stronger long-term price performance before deciding how much of their portfolio to commit to it.
Related: Ford is done chasing the budget buyer