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Ford Stock Is Soaring Because Its Dividend Is Back

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Ford stock was gaining after reporting earnings Wednesday.

Leon Neal/Getty Images


Ford Motor

stock was on the rise after the company reported a far better quarter than General Motors did earlier in the day.


Ford

(ticker: F) managed to beat profit projections, just like its peer did, but Ford also raised full-year profit guidance, something GM couldn’t do. Ford edged out GM in another way too. It restarted its quarterly dividend payment to shareholders.

After the market closed Wednesday, Ford (ticker: F) reported earnings per share of 51 cents, $3 billion in operating profit, and $37.5 billion in sales. Wall Street was looking for EPS of 27 cents, $1.7 billion in operating income, and $38.2 billion in sales.

Ford stock is up about 9.3% in premarket trading Thursday.

Financial guidance looks solid. Ford raised full-year operating profit guidance to a new midpoint of about $11 billion from a prior midpoint of about $9.5 billion. That implies $2.1 billion in fourth-quarter operating profit for the fourth quarter of 2021. The Street had projected about $2 billion in fourth-quarter operating profit.

“We are creating a spring-loaded future as we emerge from the chip shortages and COVID constraints,” said CEO Jim Farley. Spring-loaded for him means he is waiting for production to rebound when parts become available. Ford wants to rebuild dealer inventory, which is historically low.

Total vehicle sales were down nearly 18% in the quarter compared with a year ago. Such sales for the year to date were down 7% from the year-ago period.

Most important might be the dividend news. Shareholders will get a 10 cent payout in the fourth quarter. The dividend had been suspended since March 2020; Ford had paid a quarterly dividend of 15 cents before.

“The dividend reflects our confidence in the improving run rate of the business and our ability to fund all of our calls on capital, including the growing investment in electrification and the trajectory of our Ford [strategic] plan,” said Chief Financial Officer John Lawler on the company’s earnings conference call.

Ford shares dropped 2.7% in regular market hours Wednesday after General Motors (GM) reported earnings Wednesday morning. GM beat, but unlike Ford, the company didn’t raise full-year operating-profit guidance. With the money GM had already made in the first nine months of the year, the implied fourth-quarter operating profit of about $1.1 billion to $2.1 billion looked light. Analysts had been projecting about $2.3 billion in fourth-quarter operating profit. GM stock dropped 5.4% Wednesday, while the

S&P 500
declined 0.5%. The

Dow Jones Industrial Average
fell 0.7%.

Semiconductors are the reason for the weakness. Both Ford and GM have been impacted by a worldwide lack of chips. Both companies hope the situation improves in 2022.

Despite production woes, both stocks are doing well. GM stock is up about 30% year to date. As of Wednesday’s closing price of $15.52, Ford stock has gained about 77%.

Write to Al Root at [email protected]

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