Ford Yields 4.1% and Lost $6.1 Billion Over the Past Year. Its Earnings Land Tuesday Afternoon.
Key Points
Ford pays $0.60 per share annually, a dividend yield of about 4.1%.
The trailing-year loss traces mostly to noncash write-downs from the company's EV strategy reset.
Second-quarter results arrive at 4:05 p.m. ET on Tuesday, July 28.
Yes, Ford Motor Company (NYSE: F) can afford its dividend, because the $6.1 billion trailing-year loss is mostly paper while the payout is paid in cash. The dividend costs about $2.4 billion a year, and management expects $5 billion to $6 billion of adjusted free cash flow in 2026. That leaves the payout consuming under half of it.
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But the loss deserves an explanation. Ford lost $8.2 billion in 2025, but that figure included $9.4 billion of noncash write-downs tied to walking back its electric vehicle plans. Those are accounting charges on factories and programs, not cash going out the door. The cash statements told a different story, with operating cash flow of $21.3 billion last year and adjusted free cash flow of $3.5 billion.
This year has started better on both ledgers. First-quarter net income rose to $2.5 billion, helped by a one-time $1.3 billion tariff refund. Management also raised its full-year guidance for adjusted earnings before interest and taxes to $8.5 billion to $10.5 billion. And Ford Credit, the financing arm, added $783 million of pre-tax earnings in the quarter and is expected to deliver about $2.5 billion for the year -- a steady contributor the headline loss never touched.
The payout math is comfortable. A dividend of $0.15 per quarter across about 4 billion shares comes to about $2.4 billion annually, or 40% to 48% of this year's expected free cash flow. On a roughly $14.70 stock, that payout yields about 4.1%. Coverage like that has room to spare, as long as the cash guidance holds.
That is what Tuesday's report, due at 4:05 p.m. ET, has to show. Adjusted free cash flow was a $1.9 billion outflow in the seasonally weak first quarter, so the cash needs to start arriving in the middle of the year. Management has also flagged about $2 billion of commodity cost headwinds, led by aluminum, for the guidance to absorb.
For income investors, the setup is simpler than the headline numbers suggest. The 4.1% yield is covered by cash the accounting loss never touched. Tuesday's job is to show that cash flowing on schedule, and that matters more for the dividend than any earnings figure the report prints.
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.