March 28, 2024

Ford Brings Back Dividend

DETROIT – The Ford Motor Company on Thursday said it would resume paying quarterly dividends to its shareholders for the first time since 2006 as it closes out its third consecutive profitable year.

The company’s directors approved paying out 5 cents a share on March 1. Ford recently signaled that it was close to restoring its dividend, and analysts had been expecting an announcement soon, though some were forecasting a slightly higher amount.

The payouts will total about $200 million, Ford said.

“We have made tremendous progress in reducing debt and generating consistent positive earnings and cash flow,” William Clay Ford Jr., the company’s executive chairman, said in a statement. “The board believes it is important to share the benefits of our improved financial performance with our shareholders.”

Ford is the first of the three Detroit automakers to bring back a dividend and the only one to have avoided filing for bankruptcy during the 2009 recession. After closing numerous plants and cutting thousands of jobs as part of its restructuring, Ford has been focused on strengthening its balance sheet by paying down debt and improving its liquidity.

“The shareholders who have invested in us need to get a return on that investment,” Ford’s chief financial officer, Lewis W.K. Booth, said on a conference call with reporters. “As our business improves and our results improve, we’ll continue to look to see if we can increase the dividend.”

Mr. Booth said Ford expected that it could continue paying a dividend even if the economy worsened in the future. The company has historically cut its dividend during downturns to conserve cash.

Ford suspended its common-stock dividend of 5 cents a share in September 2006, a year after its credit rating fell into junk status. Company officials had said they intended to resume a dividend after regaining an investment-grade rating, but in October, Mr. Booth said the dividend might be restored even before that happens. Ford is currently rated one notch below investment grade.

Several analysts said the four-year labor agreement that Ford signed with the United Automobile Workers in October paved the way for the company to bring back a dividend in the first quarter.

Brian Johnson, an analyst with Barclays Capital, had projected an 8 cent dividend in the first and second quarters, and Adam Jonas of Morgan Stanley estimated that Ford would pay up to $1.2 billion in dividends next year, or an average of about 7.5 cents a quarter.

Article source: http://feeds.nytimes.com/click.phdo?i=950775cff02086aebb9019f677f03c8c

Speak Your Mind