General Motors and Ford Motor will likely have a tough time convincing investors when they report results that Detroit's pricing power for gasoline cars is still strong and losses from their EV ventures are dwindling.
Ford's stock remains a buy due to strong free cash flow and low valuation, despite weak growth and a challenging industry backdrop. The Manheim Used Vehicle Value Index shows declining auto prices year-over-year, and the outlook for new car pricing is soft, per S&P Global. Ford's Q2 results were disappointing, but the company maintained its FY 2024 EBIT estimate and raised its free cash flow guidance back in July.
Market's moods occasionally swing to absurd degrees. In Ford's case, its current dividend yield (7%) now exceeds its FWD P/E of 6x. There are valid concerns over its warranty costs and quality issues.
There's more to any investment than a single number.
The markets had a strong week with the S&P 500 and Nasdaq reaching new highs, driven by declining inflation and stable factory gate prices. The Dividend Harvesting Portfolio hit an all-time high in value and profitability, generating $39.12 in dividend income and increasing forward annualized dividend income to $1,775.79. My investment strategy focuses on generating recurring dividend income while mitigating downside risk, with a diversified portfolio yielding 7.54% and a yield on cost of 9.4%.
Key Points Ford's stock has stumbled, and possible dividend cuts could intensify its position.
Ford stock is expected to publish its Q3 2024 results in the coming weeks, reporting on a quarter that saw the company's delivery growth slow considerably in the U.S. We expect Ford to report revenue of about $41.7 billion, marking a modest increase of about 1% compared to last year, while earnings are likely to come in at about $0.51 per share, slightly ahead of consensus estimates and up about 40% compared to last year. Now, Ford stock has underperformed this year, falling by about 7% year-to-date, compared to fellow U.S. auto giant GM which has gained close to 35% over the same period.
Ford Motor (F) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Baby Boomers looking to put new money to work may wish to check out the broader basket of dividend stocks while interest rates are still relatively elevated.
Mark Fields, former Ford CEO, joins 'Squawk Box' to discuss the state of EV sales in the U.S. and globally, bright sports and concerns for EVs, why customers are choosing to lease EVs over buying, competition against Chinese EVs, and more.
Investors should understand the bull and bear arguments about this Detroit automaker.
Two supercharged income stocks -- sporting yields of 5.6% and 5.8% -- have the tools and intangibles needed to catapult higher.