Ford stock (F) has fallen over 20% from its 2026 highs and is in bear-market territory. Meanwhile, the crash has pushed the stock’s dividend yield above 5%, making it among the highest-yielding S&P 500 Index ($SPX) constituents. In my previous article, I had noted that it was premature to buy the dip in F stock. With the stock now trading near its lows for the year, let’s explore whether the Blue Oval would fit into the portfolios of investors looking for high dividend stocks.
Ford’s Dividend Policy
To begin with, let’s look at Ford’s dividend policy, which is the most generous among legacy automakers. The company pays a quarterly dividend of 15 cents, which it has held static since July 2022. It intends to return between 40% and 50% of annual free cash flow to shareholders and has topped up its regular quarterly dividend with a special dividend in each of the three preceding years to reach that threshold.
Last year, Ford paid a supplemental dividend of $0.15 after dishing out $0.18 in 2024. It paid a special dividend of $0.65 in 2023, which it attributed to the return on its investment in electric vehicle (EV) startup Rivian (RIVN). The company did not announce a special dividend this year, which is not surprising as it overshot its payout targets with the regular dividend. Ford’s free cash flows tumbled to $3.5 billion last year compared to $6.7 billion in 2024 due to President Donald Trump’s tariffs and supply chain issues after a fire at a key supplier. For 2026, the company has guided for adjusted free cash flows between $5 billion and $6 billion. Meeting that guidance would mean that the company would be able to pay the regular dividends without much stress, even though I doubt it would pay additional dividends next year.
F Stock Forecast
While sell-side analysts still have a consensus rating of “Hold” on Ford, sentiment has gradually improved. Earlier this month, Bank of America reinstated coverage on the stock with a “Buy” rating and a Street-high target price of $17. Previously, in January, Piper Sandler upgraded F stock from “Neutral” to “Overweight” while assigning a target price of $16. Ford’s mean target price is $13.72, which is 17% higher than the current price levels.
Ford Has Been Plagued by Recurring Recall Issues
I have been bearish on Ford for quite some time now due to rich valuations and the company’s perennial troubles with recalls and warranty costs. Last year, the company had 153 recalls, which is the highest for any automaker in modern history. In terms of numbers, it recalled 12.9 million vehicles last year, and 2026 looks like it'll be another dismal year for Ford in terms of recalls.
The company’s EV losses are still quite high for comfort, even as it expects pre-tax losses to narrow to between $4 billion and $4.5 billion this year. These losses have been eating into the otherwise stellar performance of its internal combustion engine (ICE) business.
Ford Restructured Its EV Business
Like Detroit peers, Ford has restructured its EV business and announced a $19.5 billion write-down in December, of which $5.5 billion would be in cash. The company has curtailed production to align it with user demand and is now focusing on affordable models. It is looking to build a $30,000 electric pickup truck, which would be available in showrooms next year. Importantly, Ford expects the new models to be profitable from the start.
It, however, remains to be seen how that model clicks with buyers, as Ford's electric F-150, whose ICE avatar has been America’s best-selling pickup for decades, failed to achieve the expected numbers. The electric pickup market has incidentally been quite challenged, and even Tesla’s (TSLA) Cybertruck volumes are a tiny fraction of what CEO Elon Musk once touted.
Should You Buy the Dip in Ford Stock?
I, meanwhile, believe Ford’s risk-reward is a lot more favorable now compared to when I last covered the company earlier this year. The fall in its stock price has pulled down the valuations, and the stock now trades at a forward price-to-earnings (P/E) multiple of 7.66x. The company’s earnings should rise further next year as EV losses continue to narrow, with analysts modeling a 21% increase in 2027 after a nearly 40% rise this year.
Overall, I find Ford a decent buy for investors who are looking for a high dividend stock that can potentially deliver double-digit annualized total returns over the next couple of years.
On the date of publication, Mohit Oberoi had a position in: F , TSLA , RIVN . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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