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The global automotive industry has been steadily concentrated within a handful of giant corporations. With the likes of General Motors and Stellantis having multiple automobile brands under their umbrella, Ford Motor Company has remained one of the outliers of this global trend.
Ford has long been a staple of U.S.-made products that have been popular all over the world and the company has steadily increased its reach outside of the United States. With a rich history and a robust brand, Ford has come under some financial pressure over the past year, as the company’s profit margin shrunk considerably in 2022 due to supply chain issues and high inflation. However, the company is optimistic about the future and expects its net profit margin to increase to 10% by 2026 from 4.82% in 2022.
Ford is one of the most recognizable brands around the world and the stock has been especially popular among retail investors, thanks to its affordable share price and a formidable dividend yield.
If you are considering adding Ford stock to your portfolio but don’t know where to start - this investfox guide is for you.
The 2022 fiscal year has seen a major challenge for the automotive industry. High inflation and supply chain constraints meant that material costs soared throughout the year, which put a major strain on the bottom line of automotive companies around the world. Ford was also heavily affected by these issues and the company’s stock performance and financials clearly reflect the damage.
Over the course of a 12-month period, Ford’s stock lost around 20% of its market capitalization, as the company struggled to contend with difficult market conditions. However, the release of the all-electric Ford F150 Lighting truck proved that Ford has a clear vision of its place in the EV industry and has taken the transition to electric vehicles seriously. A compelling pipeline of upcoming all-electric vehicles, as well as a gradually improving supply chain, have led to some analysts identifying Ford as one of the largest, yet undervalued, stocks on the market today. On the other hand, Ford’s slow growth and shrinking profits have meant that investors are shying away from buying up the stock at present value.
Ford is a dividend-paying company that maintains a current dividend yield of 4.73%, or $0.15 per share, which is an attractive offering for most dividend investors.
As for financial performance, Ford’s Q4 2022 report highlighted the negative effects of supply chain issues on the company’s bottom line:
Ford’s bottom line has been nearly cut in half thanks to supply chain issues caused by the russian invasion of Ukraine, which disrupted the supply of materials necessary for Ford’s complex assembly line. With the aforementioned issues still ongoing, it is unlikely for Ford stock to gain substantial upward momentum in 2023.
Before investing in Ford stock, it is important to consider the inherent advantages and disadvantages that come with owning Ford stock.
Ford is considered to be a blue-chip stock. Despite its relatively modest size compared to some other giants on the market, Ford has long been one of the most successful automotive companies in the world and is a component of the S&P 500 benchmark index.
Ford is a dividend-paying stock with a long track record of successful payments. As of April 2023, Ford maintained an annual dividend yield of 4.73%, or $0.15 per share, which makes it one of the better alternatives for dividend investors.
Ford had its initial public offering (IPO) on the New York Stock Exchange in 1956, under the ‘F’ ticker symbol. The stock is a component of the S&P 500 and a former member of the Dow Jones Industrial Average.