Ford (F 0.51%) has a long history, having been around since 1903. The Detroit automaker is a symbol of American industrialism. And it produces some of the most popular vehicles ever in the F-Series pickup trucks.
This auto stock isn't winning any contests when it comes to capital appreciation, though, as it has declined 16% in the past decade (as of Sept. 4). But those that seek income might like the business. Here's how many shares of Ford that investors will need to own to generate $10,000 in yearly dividends.
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Cheap valuation supports high dividend yield
Ford currently pays a quarterly dividend of $0.15 per share. This means that you'd have to own 16,667 shares to receive $10,000 in dividends on an annual basis. Exactly 10 years ago, the company paid $0.14 per share each quarter, so the dollar amount has barely budged.
Ford shares trade at a cheap valuation. Investors can buy the stock at a forward price-to-earnings ratio of just 8.6. This makes for a hefty dividend yield of 5.14%.
Influenced by macro forces
Investors shouldn't expect Ford stock to beat the market over the long term. And even though it pays a dividend, the income stream isn't always a sure thing.
That's because Ford's operations are extremely cyclical. A car is a huge purchase decision for a household, with economic conditions and interest rates both key factors. In a recessionary scenario, for instance, Ford's sales are likely to take a hit. And with it, profits will be under pressure. Ford might even start to post net losses, forcing the management team to reduce or even pause dividend payments. Investors should keep this possibility in mind.
