Report – Among falling profit, Ford opts to increase dividends image

Ford Motor, the second largest US automaker, looks ready to raise its quarterly dividend quota by 20 % for the third consecutive year, even though the carmaker battles dwindling profit and posts modest sales surges in its home market.

According to a Bloomberg forecast, the payout currently at 12.5 cents a share could rise to 15 cents sometime this week after the Dearborn, Michigan-based automaker decided to restore dividend payouts in 2012 at a 5 cents level. The latest increase came last year, totaled 25% and came after the carmaker restored the dividends following a more than half a decade hiatus.

Back in September 2014, recently appointed chief executive officer Mark Fields discussed Ford’s situation with investors and warned that 2014 pretax profit could drop to $6 billion, below earlier expectations of $7 billion to $8 billion. The slowing profit growth was accounted due to increased recall costs, higher overseas losses and widening development and production spending attributed to the introduction of the aluminum intensive new generation of the 2015 F-150 pickup truck. “Our plan for dividends is to continue to grow regular dividends up to the point that we don’t believe this is sustainable,” said back in September Chief Financial Officer Bob Shanks.

Raising the dividend payout to 15 cents would entitle Ford’s founding family, which still holds control over the company to this day through its 70.9 million Class B shares, to a total yearly payout of $42.5 million. Among the family members we can highlight Executive Chairman Bill Ford, great-grandson of founder Henry Ford, and they jointly hold all the Class B shares, which grant them control over 40% of the voting power inside the company.

Via Bloomberg