Ford’s Fat Dividend Yield Looks Tempting, What’s The Catch?

At first glance, Ford’s dividend might look like a smooth ride. The company is handing out $0.75 annually and has sweetened the pot with special payouts in recent years. These bonuses are part of Ford’s plan to return 40% to 50% of its adjusted free cash flow to shareholders.

But don’t let the recent payouts lull you into a false sense of security. Ford’s dividend story hasn’t always had such a steady cadence. In fact, it’s sputtered more than once. The Board yanked the dividend twice in the past two decades.

Those two halts in less than two decades are red flags for income-focused investors, especially those banking on reliability.

Key Points

• Despite a 7.1% yield and recent special payouts, Ford has cut its dividend twice in 20 years, a red flag for income investors.

• New tariffs have forced Ford to pull guidance, creating uncertainty and raising the odds of a dividend cut in the near term.

• The commercial EV division is promising, but until cash flow stabilizes, Ford’s dividend remains at risk.

What’s Driving Ford’s Financial Engine Now?

Ford roared into 2025 with optimism having just posted its highest revenue in history thanks in large part to a broad portfolio that spans from electric pickups to commercial fleet software through its Ford Pro division.

CEO Jim Farley was enthusiastic in the fourth-quarter earnings call and emphasized how Ford was becoming “fundamentally stronger” and poised for improved profitability thanks to efforts around cost discipline and quality control.

Ford had expected to generate $3.5 to $4.5 billion in adjusted free cash flow this year, a step down from last year’s $6.7 billion, but still enough to comfortably support its dividend and $8 to $9 billion in capital expenditures.

But then came the curveball of sweeping tariffs that hit imported goods across the board, including the raw materials and components that Ford relies on. Management’s reply was to pull financial guidance altogether, which in turn created a fog of uncertainty to the chagrin of investors.

Will Tariffs Slam the Brakes on Payouts?

Ford’s balance sheet looks strong, at least for now thanks to $27 billion in cash and $45 billion in total liquidity.

But even with that cushion, dividend risk is rising fast. Analysts widely expect Ford to trim its payout, with some predicting a cut to $0.12 per share as early as the next quarter.

Why does this matter so much? Because Ford has been here before, and flinched. During prior crises, it didn’t hesitate to yank the dividend to preserve cash. And unlike companies with fortress-like pricing power or recurring revenue streams, Ford is extremely sensitive to external shocks like tariffs and rate hikes.

A Dividend Yield That Might Be a Mirage

Right now, Ford’s dividend yield of 7.1% is eye-catching in a world where the S&P 500 averages around 1.5%. But high yields often come with strings attached, especially when the payout is at risk of being slashed.

For long-term, income-oriented investors, Ford’s checkered dividend history make it a dicey bet. The company is expanding in commercial EVs to leaning into its Ford Pro platform, which may be a sleeper hit in the fleet management space. But until the dust settles on trade policy and cash flows stabilize, investors looking for stable, predictable income might want to steer clear.