Hey, Ford, Where's My Dividend?

The company has had four profitable quarters in a row. It's generating cash hand over fist and gaining share in markets around the world. It has become the brightest light in a brutally consolidating industry.

So when is Ford (NYSE: F  ) going to reinstate its dividend?

Dividends? You kidding me? Dividends?!
You'd think I'd have to be kidding, wouldn't you? After all, anyone who has paid even a little bit of attention to Ford over the last couple of years knows two things:

  • The company's spectacular turnaround is already the stuff of myth and legend -- CEO Alan Mulally's moves will be talked about and analyzed in business schools for decades.
  • That turnaround still has a long, long way to go.

I mean, here is a company that has something like $31 billion in automotive debt outstanding. Sure, they're managing it well -- they made a $3 billion payment in April, and Moody's just raised the company's credit rating another notch, to B1 -- but carrying that much debt costs big money. And that's a cost added to Ford's cars and trucks that Ford's bankruptcy-lightened Detroit competitors -- not to mention Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) -- don't have.

Sure, the Dearborn giant is doing better than even its biggest fans could have foreseen through their blue oval glasses. And if their product momentum continues, and if the economic recovery doesn't falter, they should be able to pay down that huge debt over the next few years without too much trouble.

But it's still early days for this recovery. Asking about dividends at this point seems to warrant an answer like the one former NFL coach Jim Mora famously gave when asked about his struggling team's chances of making the playoffs. ("Playoffs? You kidding me? Playoffs?! I just hope we can win a game!")

Then why did you even bring this up?
Actually, I didn't. Someone else did, at Ford's annual meeting earlier this month. And while it's easy to dismiss the kind of out-of-left-field questions that get asked at shareholder events -- and this one was dismissed out of hand by Executive Chairman Bill Ford -- it's going to be harder to dismiss other stakeholders who are already pushing for a return to the good old days.

Stakeholders like the United Auto Workers, for instance.

Yep, should have driven that stake through the UAW's heart
There are three certainties of life in Detroit: Death, taxes, and the UAW's leadership complaining that they're not getting their fair share. And guess what? The union is already starting to lean on Ford.

Yep, notwithstanding that little $31 billion hole in Ford's balance sheet, incoming UAW president Bob King has already put Ford on notice, filing several grievances and saying recently that "We just want to make sure when things turn around we share in the upside."

Uh-huh.

Listen up, Mr. King: We -- and by "we" I mean both Ford's shareholders and the several hundred million American taxpayers responsible for your present good fortune -- haven't forgotten that you got a whole lot of undeserved goodness handed to you on a silver platter just last year.

Remember the General Motors and Chrysler bankruptcies, where the companies were restructured to protect the UAW's interests at the (great) expense of bondholders, investors, taxpayers, and the rule of law? The ones where the retiree health care funds that your union controls (hey readers: will your employer pay for private health care insurance after you retire?) ended up owning 17.5% of GM and 55% of Chrysler?

Well, we remember. And when we hear you whining because Ford's salaried workers might get 3% raises this year -- this after your UAW members got profit-sharing checks, in accordance with the current contract -- certain words come to our minds.

Words my editor won't let me use.

But let's just say that you -- like that Ford shareholder asking about dividends -- really ought to pipe down and count your blessings while the grownups running Ford work on paying down that debt.

Fool contributor John Rosevear, who was briefly a UAW member once upon a time, owns shares of Ford. Ford is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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  • Report this Comment On May 24, 2010, at 4:10 PM, wigginsrl wrote:

    Look, ya waana ask about dividends, ask about Apple dividends! You'd think at a market cap of multi-quadzillion dollars, they might pay a little?

    Well, no.

    But you you might as well get use to the unions. When the President says "I owe you" and Congress is working on a bill to hand over the workers of America to the union godfathers in exchange for guaranteed votes, the unions might be expected to feel a little cocky.

  • Report this Comment On May 24, 2010, at 4:28 PM, loki2009 wrote:

    Ok - damn it. I really wish you bonehead Fools who choose to trash Ford (and that in itself is ok to do - that's your choice) would at least do your homework.

    Mr. I know something Rosevear - when you say Ford has debt - something its Detroit cousins and Toyota and Honda do not - are you talking from the side of your mouth that is located about 3 feet off the ground (give or take a few inches)?

    This is the stuff that an analyst would (or should) be sued for.

    How much in liabilities does your debt less GM have? Not much??? EEEERRRRRRP!!! Wrong. $107 billion. Ford must be worse - right? Nope $98.5 billion. But GM has more cash right? Nope again Johnny boy. After accounting for restricted cash GM has $3 billion less than Ford.

    But GM has positibve equity and Ford has none. Well you got me there. GM (the new and improved one) did create a smoke and mirrors $30 billion in Goodwill for its balance sheet and $14 billion in intangibles value for $44.5 billion smoke and mirrors to give them net equity of about $23 billion. Hey - what about Ford. They have - $4.8 billion in shareholders equity right? Yeah ok - because they wrote off all their good will and intangibles. That's right - zero on their balance sheet. If they put the same levels on that GM created while smoking joints one night - Ford would have poistive $40 billion in S/H Equity.

    And if GM is going to keep GMAC (at least a minimum 10% share) why did the hide the $500 million loss on the "Predecessor GM's" income statement?

    And the "new GM" (successor) sold about 1.99 million cars last quarter yet only achieved about the same revenue as did Ford with 1.235 million sales. SOmething not right here you say? That's right - even using every unfair advantage they got - they still have to sell 60% more cars than Ford, at roughly the same total revenue (so way less in average cost) and they still can't make the profit that Ford made.

    You Ford bashers on here are tired jokes. None of your "analysis" stands up to a candle fart in the wind and you should be ashamed of it.

    And wait - toyota - total debt of $190 billion and long-term of $80 billion. ANd Honda - about $80 billion total debt - slightly less than 1/2 is long-term (about the same as Ford). Johnny boy - it's not nice to be an outright liar on these boards and sorry - I am calling you on it. I say it now - you are an outright liar for what you have just stated about Ford's debt versus : " And that's a cost added to Ford's cars and trucks that Ford's bankruptcy-lightened Detroit competitors -- not to mention Toyota (NYSE: TM) and Honda (NYSE: HMC) -- don't have."

    I challenge the Motley Fools moderators for taking my comment off the forums for calling a spade a spade. Mr. John Rosevear has proved himself an outright liar and should not be allowed to publish articles and any comments he makes should be restricted by the moderators and cross-checked for further outright lies before they are released for publication.

    This is almost sufficient to cause me to file an official complaint about uttering a falsehood regarding a number of registered secuirities.

    The stuff after the "Then why did you bring it up" was not too bad - far closer to the truth. But darn it I wish people would research better rather than just paying lip service to the long standing myths of the other auto makers when they write about Ford.

    Loki

    Yes I am a Ford supporter

    And yes I own Ford shares - A TON OF THEM (almost two tons actually)

  • Report this Comment On May 24, 2010, at 5:18 PM, Forsthoefel wrote:

    Even though my Mother owns some Ford preferred and hasn't seen a dividend from that in several quarters, at least the value is up near where she bought it.

    I'm glad she doesn't whine like the UAW.

    I wholeheartedly agree with everything in this post.

  • Report this Comment On May 24, 2010, at 6:18 PM, loki2009 wrote:

    Sorry - meant almost two hundred tons (350,000 shares).

    Loki

  • Report this Comment On May 24, 2010, at 6:23 PM, loki2009 wrote:

    And Forsthoefel - don't despair. I don't pretend to be an expert on the Ford prefs - but I believe that if you are holding the CAP Trust II prefs they are backed by convertible bonds and first of all - you can convert into shares whenever you want, and secondly the unpaid "dividends" can only last for a max of five years and the arrears have to be made up and paid out. Again - I have not examined them closely so am not giving you advice or recommendations - but I do believe your Mom has a good chunk of change owing to her and she will get paid - sooner rather than later.

    All JMO - but hey - I think you have something worth holding on to - even if that is just an opinion.

  • Report this Comment On May 24, 2010, at 6:54 PM, mtracy9 wrote:

    The "grownups" running the Big 3 led the U.S. auto industry into the tank. It is only recently that we have had a real grownup in charge of Ford.

  • Report this Comment On May 24, 2010, at 7:07 PM, TMFMarlowe wrote:

    Uh, Loki, there's not one word in this article that trashes Ford. Not one. Nor are there any words that say Ford's competitors are debt-free. Back up, take a deep breath, and try reading it again a little more slowly. Then try the commenting thing again. OK?

    John Rosevear

  • Report this Comment On May 24, 2010, at 8:50 PM, loki2009 wrote:

    Respectfully TMF Marlowe I ask you to revisit the quote I highlighted and the context in which it was made.

    By John Rosevear: "...but carrying that much debt costs big money. And that's a cost added to Ford's cars and trucks that Ford's bankruptcy-lightened Detroit competitors -- not to mention Toyota (NYSE: TM) and Honda (NYSE: HMC) -- don't have."

    I don't know - maybe I am missing something - but that is an out an out lie or falsehood in my books. But perhaps I am too simple a person for analyst double speak etc.

  • Report this Comment On May 24, 2010, at 9:02 PM, loki2009 wrote:

    Also - I did as you asked TMF Marlowe and went back and read everything again. For the third and fourth time. And I will admit that I reacted strongly in an adverse way largely because of the many poor articles that have been written on these forums. So I will step back a bit and point out again that everything that was written after the sub-title "Then why did you even bring this up?" and perhaps a paragraph before is pretty good as I previously stated. But I stand by my remarks on the lead-in info and the mindless repeating of nonsense that has almost become "urban legend" stuff about Ford's competitors. None of it was true - particularly the debt free part.

    And finally - just a personal thing - the part about "... the Dearborn giant is doing better than even its biggest fans could have foreseen through their blue oval glasses". Johnny - you need to pay more attention to the Ford TT Private Forum (which previously was in the Ford public Forums) on Google where you would have observed that we have correctly predicted Ford's results almost to the dollar - for the past 12+ months - well in advance of their reporting and certainly in stark contrast to the paid analysts.

    .

  • Report this Comment On May 24, 2010, at 11:00 PM, wolfman225 wrote:

    Can anyone PLEASES get the spammers off this site? It's getting so I can't read any of the articles' comments w/out having to wade through that irrelevant bullsht.

    Maybe TMF needs to move the entire site to a membership model.

  • Report this Comment On May 25, 2010, at 5:35 AM, plange01 wrote:

    ford dividend? in dreamworld!!ford for all the ridiculous turn around talk is still well over a 100 BILLION in debt and has sold everything including the rights to its own name!! make no mistake ford will wind up just like chrysler and the disgrace GM closed by the end of 2010...

  • Report this Comment On May 25, 2010, at 6:36 AM, TMFMarlowe wrote:

    Loki, tell your buddies in that forum that they need to pick up a book on how to properly read a company's balance sheet. You guys are quoting the "total liabilities" number as debt, which reflects some basic misunderstandings.

    Look again after you acquire some knowledge and you'll discover that GM doesn't have "$107 billion" in debt, it has something in the neighborhood of $5 billion, which is not particularly significant. And Ford, as I said, has a bit over $31 billion (though their most recent balance sheet will show a higher number, because they made a big payment in April).

    By the way, I went long a ton of those Cap II preferreds in early March 2009. Whatever motives you're attributing to me when you call me a "liar" are almost certainly off base.

    John Rosevear

  • Report this Comment On May 25, 2010, at 10:16 AM, mikecart1 wrote:

    Ford will pay dividends when they start making decent cars.

    End of story.

  • Report this Comment On May 25, 2010, at 10:37 AM, TMFMarlowe wrote:

    mikecart1, have you driven a Ford lately? They already make decent cars, and some that are way better than just "decent". Try a Mustang, or a Flex, or a Fiesta. Good stuff, all of 'em.

    Thanks for reading.

    John Rosevear

  • Report this Comment On May 25, 2010, at 11:11 AM, loki2009 wrote:

    So you are making a distinction between debt and liabilities. That's not a fair distinction. You may choose to speak of different kinds of debt, bank debt, bond debt, convertible debt, accounts payable, and on and on - but a debt is a debt is a debt and a liability is a liability is a liability. And both are the same as each other in definition.

    Debt:

    an obligation to pay or do something

    Liability:

    indebtedness: an obligation to pay money to another party

    I have studied finance and economics at some of the best universities in the world - right up to the PhD level and have owned my own companies and been the CFO of substantial companies. I have a great understanding of what are debt/liabilities and often think that's it's the various analysts out there that need to pick up a book and do some studying.

    You people play shell games with words and numbers. To prove my point - does the Balance Sheet you suggest I and my friends learn to read have a section titled: Liabilities, Debt and Equity? Most certainly not - I am pretty sure it says: Liabilities and equity. I will sending you info on how to sign up for some courses I am teaching.

    So the terms used by GM stating: short term debt and current portion of long-term debt of $8.77 billion are not debt even though GM says so? And 20 billion in accrued exenses including derivative liabilities are not debt so I guess there is no obligation to pay anyone. And then of course post-retirement benefits other than pensions and pensions (both on the liability side of the B/S) of some $35 billion are not debt either. UAW will be interested in that brilliant definition oh wise one.

    John - you better go back and do some more studying of your own and you better go pay more attention to the smoke and mirrors fabrications on the GM Financial Statements and start asking a few more critical questions about "how can things really be this way?"

    Perhaps you can simply tell us: What was the total interest expense for the "new and improved" GM? Not the net mind you - but the total. I can tell you - but let's see you do some digging and then explain the numbers you find when there is only $5 billion in real debt and that's not really significant.

    Loki

  • Report this Comment On May 25, 2010, at 12:00 PM, mountain8 wrote:

    I believe unions were the best thing for America when it began. Many thanks for the safety and progression in workers rights.

    I believe unions are now more like the third political party.

    I believe unions are hurting their members by bullying their way through.

    I believe unions should get raises AFTER the owners get dividends.

    Now that the unions own part of the auto industry, maybe they should give you a salary and dividends.

    Your union leaders are lying to you all. How can they be for you when they are owners of your employers.

  • Report this Comment On May 25, 2010, at 12:32 PM, SwampBull wrote:

    The only thing more despicable than corporate greed is union greed. At least corporate greed usually requires some intelligence, or at least cunning.

  • Report this Comment On May 25, 2010, at 6:18 PM, baldheadeddork wrote:

    I swear to God, any mention of a union will put the cumulative IQ of any thread into deficit spending.

    It amazes me that otherwise allegedly rational people can have rational discussions about mergers, acquisitions, executive compensations and every other kind of deal where someone wins and someone gets screwed, but even hint at a union making its case and people lose their sh*t.

    Anyone who wants to b*tch about this can step up and say there isn't an adversarial relationship when they negotiate your salary. John, you can go first.

    If Ford makes money, it's employees deserve to negotiate for better compensation. Someday, someone can explain to me how that became such a radical concept among a bunch of so-called capitalists.

  • Report this Comment On May 25, 2010, at 6:19 PM, baldheadeddork wrote:

    One last thing, John - was it the UAW that brought up dividends? Or was that just a hook to get in a paragraph of union bashing?

  • Report this Comment On May 25, 2010, at 9:46 PM, Varchild2008 wrote:

    Ford has a stock that does not pay dividends means that Ford can pay off the debt that generates the most anxst from stock market analysts and wall street investors.

    I think John Rosevear is absolutely impatient and incorrect to scream "Where's my dividend!"

    Hey... I invest in DPS.... Of course I like dividends.... But that doesn't mean we should expect them whenever a company is experiencing a rebound in their business.

    Take a breath folks..... The focus is that we should DEMAND that Ford do whatever it takes to clean up their balance sheet.

    I want to see Ford's debt at 2.55 times EBITDA before I will expect a dividend... This is entirely based on CEO Larry Young's cited goal, which has been achieved, at Dr. Pepper Snapple Group. It is a great formula to follow to ensure sustaining success rather than just merely achieving it.

  • Report this Comment On May 25, 2010, at 10:06 PM, Adamu07 wrote:

    Loki doth protest too much, methinks.

    But, I'd love to see a satisfying response from John. Perhaps a re-write of the article to address what seems like some at least fairly significant issues with this one?

  • Report this Comment On May 25, 2010, at 11:03 PM, loki2009 wrote:

    Hey Adamou07 - perhaps you are right. I have just grown weary of the constant negative comparisons of Ford to "all other automakers" that I think are done based largely on myths or on things that may have been true 3-5 or more years ago. And this constant "Watch out for the new Grossly Mismanaged" really ticks my butt. Let's let them screw us once again - with the willing participation of our governments.

    And finally - the blind adoration of all things Toyota. Did anyone at all pay attention to President Toyoda's address to shareholders (about a year ago) when he stated that Toyota was in serious trouble. That they had sacrificed their values for growth? That they had seriously lost sight of their values? That in terms of the five stages of the death of a business - in his opinion they (Toyota) are at the 4th stage - only one step removed from outright capitulation (death)? Obviously from the postings here on the Fool - very little real analysis has been done on the other automakers. Toyota is in the most serious trouble of its existence - and many Fools are in complete obliviousness to this fact. These are not my words - but the words of the President of Toyota himself.

    Wake up Fools - you are missing the boat.

  • Report this Comment On May 25, 2010, at 11:18 PM, Superdrol wrote:

    Actually Henry Ford was known to have a mutual affiliation with Hitler. I'm sure you knew that though Loki.

  • Report this Comment On May 25, 2010, at 11:36 PM, loki2009 wrote:

    Superdrol - that is just plain garbage crap to raise at this point in history. Not even worthy of debate. The whole US business establishment, the US government, other world governments, and even the Vatican have a lot to answer for regarding their actions at that point of world history (and no I am not Jewish - I am Roma). Why even bring that into the equation at this point in time other than to be a pure sh!t disturber? Get out of here.

  • Report this Comment On May 26, 2010, at 10:11 AM, susan400 wrote:

    dream on ford is dead meat,

    can't compete w legacy costs

  • Report this Comment On May 26, 2010, at 10:40 PM, DocMonsta wrote:

    Ummmmm.....it didn't really seem like the article was bashing Ford at all.

    Disclosure: I own less than two hundred tons of Ford shares.

  • Report this Comment On May 28, 2010, at 11:58 AM, mikempp wrote:

    mention unions and otherwise honest people become liars, unions were good for america and are good for america today and in the future. the ceo's and banks rob america but for a worker to have a decent wage is enough to make your skin crawl, you people are a disgrace.....

  • Report this Comment On May 28, 2010, at 4:52 PM, sharpw wrote:

    Best thread I have read i a while--other than a few off base comments like the Henry Ford and Hitler one. John and Loki have both provided useful information. Thanks

  • Report this Comment On May 28, 2010, at 7:09 PM, wrenchead wrote:

    I think all the politicians that approved the GM bailout money are worried that history will judge them as fools.

    When I see adds by a CEO stating that all loans have been paid early and in full with interest and keeping a straight face how can you believe anything these jokers say.

    The public is not that stupid. Where can we get a loan like that.

    You can pretend that things are great now at GM and try to paint a picture that they have turned the corner, but we know that 90% of management are the same bunch that drove it to the ground. Hell, the current CEO didn't even want the job.

    Just keeping talking and maybe you'll trick more fools into jumping at the IPO and the public will get some of their hard earned dollars back. Then we can spend on something more reasonable....like banker bonuses.

    Sheesh!

  • Report this Comment On May 28, 2010, at 7:09 PM, wrenchead wrote:

    I think all the politicians that approved the GM bailout money are worried that history will judge them as fools.

    When I see adds by a CEO stating that all loans have been paid early and in full with interest and keeping a straight face how can you believe anything these jokers say.

    The public is not that stupid. Where can we get a loan like that.

    You can pretend that things are great now at GM and try to paint a picture that they have turned the corner, but we know that 90% of management are the same bunch that drove it to the ground. Hell, the current CEO didn't even want the job.

    Just keeping talking and maybe you'll trick more fools into jumping at the IPO and the public will get some of their hard earned dollars back. Then we can spend on something more reasonable....like banker bonuses.

    Sheesh!

  • Report this Comment On May 29, 2010, at 2:47 AM, wenger2k wrote:

    The one (and only) reason I think restarting a dividend payment may make sense is that in the case of the Cap II preferred's (and probably other preferred's as well) which apparently the author owns, the dividend was not cut but rather deferred so while they don't have to pay the dividend currently, it is accumulating in the shares and will have to be paid at some point in the not too distant future. And the terms of the repayment are strongly dictated by the shares. By not paying them they are continuing to accumulate debt (using the term loosely as I'm not sure how they account for this deferred payment on their balance sheet). Under the terms of the shares Ford is also responsible for paying interest on the deferred payments so there is little incentive for them to continue to defer the payments if they have the cash flow available to do it. Their only incentive is that as I understand it they are only allowed to defer the payment plan a single time and would therefore not be allowed to defer the payments again if they ran through another tough spell.

  • Report this Comment On May 30, 2010, at 1:46 PM, djoshimisk wrote:

    Hasn't outstanding ford common shares more than doubled in the last few years? Isn't a portion of ford's profits at least partially due to dilution of the common stock? Isn't ford paying down legacy liabilities by printing more and more stock? I know people that drive ford trucks but I can not think of anyone (ford employee family members excepted) that drives a ford car.

  • Report this Comment On May 31, 2010, at 7:00 PM, Frank506 wrote:

    My 13 year-old Lincoln Continental that I have driven for 136,000 miles without a problem must now be junked because of its parts made obsolete by Ford three years ago that can not be found anywhere in the world and to re-fabricate would be prohibitive in cost. Since all Ford vehicles over 10 years of age have the same problem, how will Ford stay in business with the reputation of not taking care of their existing customers? I'll never buy another Ford product.

  • Report this Comment On June 01, 2010, at 1:30 AM, loki2009 wrote:

    Sorry man - Ford profits due to a dilution of stock? You need to explain that because that's a new one on me. I don't know how dilution affects profits directly unless you are using the proceeds of sales of new Ford shares to reduce debts/liabilities.

    Obsolete parts - please expalin to me - how is that different than any other manufacturer in the world (let alone Ford or any other car maker)? It's a fact of life - after so many years - any manufacturer will stop producing parts for an out-of-date model. Thirteen years - that's a good run even if you have low mileage. My Dad had a 13 year old Mercury Sable with less than 60,000 miles on it - he didn't complain about lack of parts. He was happy that it gave him so many years of service.

    Grow up.

  • Report this Comment On June 01, 2010, at 1:33 AM, loki2009 wrote:

    And pure nonsense about Ford family members being the only ones who drive Ford cars. Comments like that lead one to believe there should be some form of "Intelligence Test" or "Sanity Test" before you can commit some BS to a post. Just not even worth getting into a dispute over - just how plain stupid is that comment.

  • Report this Comment On June 02, 2010, at 5:19 PM, RCREZ754 wrote:

    To the UAW , I am a union member in the construction trades for 48 years and the way things are now with this President who IMO has done nothing to create jobs for the millions of people that are not working and running out of their unemployment checks, if I were you I would be glad to have a dam job and let Ford really get back on their feet before you ask for a dam penny and as a shareholder that goes for me and the other shareholders too.

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