Ford Motor Company (NYSE: F) might not be making headlines for massive stock gains, but its impressive 7.6% dividend yield is turning heads in a market where reliable income plays are scarce. With the stock hovering under $10 for months, value investors have an opportunity to grab shares of this legacy automaker at a discount. Could 2025 finally be the year Ford’s stock price catches up with its robust dividend payout?
A Sluggish Performer That Rewards Investors
Despite its hefty dividend, Ford’s stock performance has been underwhelming. Since 2022, shares have fallen 24%, with an additional 12% dip since March 2024. However, recent movements suggest the stock may be stabilizing, gaining 3% so far this year. Even as analysts forecast a 25% drop in EPS to approximately $1.37 in 2025, Ford’s $0.75 dividend payout remains well-covered. The company reaffirmed its commitment to shareholders by declaring both a regular $0.15 dividend and a $0.15 supplemental payout in its latest earnings call.
Ford’s Competitive Edge Amid Industry Challenges
The auto industry is navigating turbulent waters, from the ongoing shift to electric vehicles (EVs) to supply chain bottlenecks and inflationary pressures. Yet, Ford’s strategy—focusing on cost-cutting, optimizing operations, and embracing a multi-powertrain approach—sets it apart. Unlike competitors betting everything on EVs, Ford is diversifying, balancing traditional internal combustion engine (ICE) models, hybrids, and EVs to manage risks while ensuring steady growth.
Ford Pro: The Silent Profit Engine
While much of the market fixates on Ford’s consumer vehicles and EV rollout, its commercial segment, Ford Pro, is quietly driving revenue growth. In 2024, Ford Pro revenue jumped 15% to $67 billion, a testament to the strength of its commercial fleet business. A key differentiator? Ford’s software subscription model, which introduces a recurring revenue stream, helping the company smooth out cyclical fluctuations. Ford’s total revenue reached $185 billion in 2024, marking its fourth consecutive year of top-line growth.
Prudent EV Strategy Instead of a Full-Throttle Gamble
Unlike Tesla (NASDAQ: TSLA) and General Motors (NYSE: GM), which have aggressively pursued EVs, Ford is taking a measured approach. By focusing on a mix of hybrids, ICE vehicles, and EVs, Ford is avoiding overexposure to fluctuating EV demand. While some view this strategy as conservative, it mitigates risk while keeping Ford positioned to capitalize on an expanding EV market over the next decade.
Analysts Predict an Upswing in Ford’s Valuation
Although Ford’s EPS is expected to dip in 2025, Wall Street analysts project a rebound, forecasting earnings of $1.65 per share in 2026 and $1.82 in 2027. At a forward price-to-earnings (P/E) ratio of just 6x, Ford trades at a steep discount compared to historical averages and industry peers. If the company executes its cost-cutting initiatives and continues its dominance in pickup trucks and commercial fleets, this discount could shrink, unlocking significant upside potential for investors.
Is Ford Stock a Buy Now?
Ford’s combination of a strong dividend yield, resilient business model, and undervaluation presents an appealing case for long-term investors. While the broader auto sector remains competitive, Ford’s brand strength, dealership network, and strategic multi-powertrain approach could position it as a standout winner in the years ahead. With a stock price still hovering near multi-year lows, now might be the perfect time for investors to take a closer look at this automotive giant.
