Ford (F -0.95%) is transforming into a high-yield dividend stock -- and for the right reason. Sometimes a stock becomes a high-yield stock because the share price falls while the dividend payment remains the same. This obviously isn't the ideal way for shareholders to become owners of a high-yield dividend stock.

In Ford's case, the company took the opportunity of its second-quarter earnings call to announce it is increasing its quarterly dividend payment by 50% to $0.15 per share, which comes out to an attractive, market-beating 4% forward dividend yield.

A red Ford Mustang Mach-E driving on the highway.

Image source: Ford.

A rare EV stock with a dividend

Investors who are interested in gaining exposure to the electric vehicle (EV) space but wary of the milieu of companies that aren't making a profit or are trading at nosebleed valuations could be well served by considering Ford, a rare EV play with an enticing dividend.

Popular EV stocks like Lucid Group and Fisker are far from profitability and thus can't be valued using a price-to-earnings multiple, but they trade at sky-high price-to-sales multiples. Tesla is profitable but trades at a daunting valuation of over 100 times earnings. Meanwhile, Ford keeps chugging along, developing an exciting portfolio of electric vehicle offerings while trading at a modest valuation of five times earnings. 

Of course, there are challenges facing Ford, as there are with any stock trading at a low valuation -- otherwise, it wouldn't be trading at five times earnings. Investors and analysts are concerned about supply chain issues that have constrained the automotive industry over the past year-plus, and auto manufacturing is a notoriously cyclical industry. But with this modest valuation, a compelling dividend payout, and promising success so far on the EV front, I think the risk is worth the reward for investors. 

An electrifying lineup

Ford is a legacy Big Three Detroit automaker, so perhaps its image isn't as cutting edge as that of Tesla or Lucid. But that doesn't mean it can't be a leader in electric vehicles. Ford has created electric versions of some of its best-selling vehicles, like the F-150 Lightning and the Mustang Mach-E. Offering electric versions of these iconic American vehicles is a recipe for success.

On the second-quarter earnings call, CEO Jim Farley reported that the company has been overwhelmed by demand for this first generation of Ford EVs, adding: "These products are in the market right now, and we have strong multi-year order banks. We're selling them as fast as we can make them."

The Mustang Mach-E was the sixth-most-researched car on MotorTrend in July, so there is plenty of interest in this product line. The Mustang Mach-E beat out Tesla's Model 3 for the honor of Consumer Reports' top electric vehicle for 2022, cementing the idea that Ford is a force to be reckoned with in the electric vehicle space.

For July, Ford reported an impressive 169% increase in EV sales compared to the prior year, although admittedly, this is coming off a low base from last year. 

Just because a company makes electric vehicles isn't a reason to invest in a stock in and of itself -- but in Ford's case, this entry into EVs has brought it into focus for a whole new potential customer base. Ford found that 75% of reservation holders for the F-150 Lightning BEV were new to Ford, and a similar 70% of Mustang Mach-E buyers were also first-time Ford buyers. 

And while everyone is excited about electric vehicles, let's not forget that Ford still has a strong business in traditional vehicles. The Ford Maverick was the second-most researched vehicle on MotorTrend for July and won the award for 2022 North American Truck of the Year at the North American International Auto Show in Detroit, while the revamped Ford Bronco won the award for 2022 North American Utility Vehicle of the Year at the same event.

Ford has an exciting lineup of new variations on its already popular vehicles set to hit the road soon, like the Bronco Raptor, the Bronco Everglades, and the F-150 Raptor R. For July, overall vehicle sales increased by 36% compared to the year before.

Is Ford a buy? 

Most importantly, Ford's efforts appear to translate to the top and bottom line. During the second quarter, revenue increased to $40.2 billion, an increase of $13.4 billion versus last year. The company is now guiding between $11.5 billion to $12.5 billion in adjusted EBIT (earnings before interest and taxes) for 2022, an increase of 15% to 25% versus 2021.

Ford stands alone as a unique opportunity within the EV space to invest in a company with a compelling fleet of electric vehicles on the road now and strong demand for more, while also trading at an attractive valuation and paying shareholders a growing dividend payout.