Ford Motor Co. (NYSE: F) has been on a rough road over the past year, with its stock sliding 15.3%, significantly underperforming the S&P 500’s (SPX) 10% gain. Weighed down by inflationary pressures, declining consumer confidence, and trade tariff uncertainties, the Detroit automaker is facing a bumpy ride. However, for patient and value-focused investors, Ford’s beaten-down valuation and hefty 7.5% dividend yield could present a compelling opportunity.
Revving Up Value: Ford’s Attractive Valuation
Despite the recent slump, Ford’s stock appears exceedingly cheap by nearly every valuation metric. The company trades at just 7.2x forward 2025 earnings estimates of $1.37 per share—remarkably low compared to the S&P 500’s 20x forward multiple. Looking ahead, analysts forecast Ford’s EPS to rise to $1.65 in 2026, lowering the valuation further to just 6x forward earnings.
On a price-to-sales (P/S) basis, Ford looks equally discounted, trading at a mere 0.2x 2025 sales estimates, despite reporting record-breaking $185 billion in revenue for 2024. This marked Ford’s fourth consecutive year of revenue growth—an impressive feat for a 121-year-old company.
A Generous Dividend with Special Perks
Ford’s dividend is where the stock truly shines. With a 7.54% yield, the payout towers over the S&P 500’s modest 1.3% yield and even 10-year Treasuries’ 4.3% yield.
What makes Ford’s dividend even more enticing is its history of special dividends. During its latest earnings call, the company announced a $0.15 special dividend for 2025. This comes on the heels of a $0.18 special dividend in 2024 and a $0.65 payout in 2023. For income-focused investors, Ford offers a lucrative mix of regular and bonus payouts, sweetening the deal.
Roadblocks and Headwinds
Ford’s recent 2025 adjusted EBIT guidance of $7 billion to $8.5 billion fell short of Wall Street expectations, trailing the $10.4 billion EBIT it delivered in 2024. The company faces rising costs, shaky consumer demand, and tariff uncertainties, which could continue to weigh on sentiment.
President Trump’s recent decision to delay proposed tariffs on goods from Mexico and Canada by one month offers some temporary relief. However, if tariffs persist, Ford CEO Jim Farley warned that it could result in billions of dollars in losses for the domestic car industry.
Wall Street’s Mixed Signals
Analyst sentiment on Ford remains cautious. The stock carries a Hold consensus rating, with four Buys, nine Holds, and two Sells in the past three months. The average price target of $10.71 implies only a 5.3% upside from current levels. While the near-term outlook appears uncertain, contrarian investors might see this as an opportunity to buy into an unloved stock with long-term potential.
Final Lap: A Value Play with Income Appeal
While Ford’s challenges are real, they seem fully priced into the stock. With a rock-bottom valuation, a juicy 7.5% dividend yield, and the potential for further special dividends, Ford offers a compelling risk-reward setup for patient investors. Those willing to endure short-term volatility could be rewarded with robust dividend income and the possibility of upside when macroeconomic headwinds subside.
