Ford's dividends return after 5 years

[Rick]

http://blogs.wsj.com/drivers-seat/2...vidend-after-five-years/?mod=google_news_blog

Ford Motor Co. said it will pay a quarterly dividend for the first time in more than five years, another step in Chief Executive Alan Mulally’s plan to restore the auto maker’s reputation with investors.

Ford canceled its dividend in September 2006 to conserve cash as its fortunes were turning down. The move coincided with the hiring of Mr. Mulally, who at about the same time approved borrowing $23.5 billion to fund its restructuring and cushion it through a downturn.

The Dearborn, Mich., auto maker’s move to restore its dividend is another sign of the turnaround among the Detroit Three auto makers. Ford said it would maintain the dividend even if another downturn hits the U.S., said Lewis Booth, chief financial officer. The company ran stress tests to ensure it would have sufficient cash to afford the quarterly payments in such an event.

“We wanted to make sure that this is sustainable,” he said. “We have substantially restructured the company,” and officers think it can remain profitable even were auto sales to plunge.

On March 1 it will pay a five-cents-a-share dividend to owners as of Jan. 31, 2012.

 

[StangsandMavs]

They've done a great job with managing cashflows and new products over the past few years... market expectations has been for them to reinstate the dividend for a little while... however, I was glad that they concentrated on managing that debt load.

From here, organic US demand could be the story for the US auto market for the next handful of years as the replacement cycle has been extremely stretched. Even as China and Europe slows, it could be a very good era for the US automakers.

You don't need a new policy initiative to tell you that your car is 10 years old, gets crappy fuel mileage, 140k miles on it and every few weeks a new nuissance repair pops up to ruin a weekend...

While I'm not expecting a return to the 17 million annual auto sales that we saw during the credit bubble, Ford is very leveraged to any stability and growth from the current US auto sales levels, which are running in the 13 million area.