Ford (NYSE:F) stock has had a fine run over the last few years. But some investors have asked whether the stock is set to underperform in 2014. After all, Ford has warned that rising costs might hurt its U.S. profits, and Europe and Asia will still be works in progress for another year or two. Where's the growth going to come from?
Fool contributor John Rosevear -- a Ford shareholder since 2009 -- definitely thinks it's worth holding on to Ford for a while longer, and it might even be worth buying right now. Two big pieces of news this week reinforced his view. First, Alan Mulally said that he's not leaving for Microsoft (NASDAQ:MSFT), and he'll stay at Ford at least through the end of the year. Second, Ford's board of directors boosted the company's dividend.
John argues that both of those developments make Ford stock look even better -- yes, even in 2014. Do you agree? Check out John's argument in the short video below, and then scroll down to leave a comment with your thoughts.
A transcript of the video is below.
John Rosevear: Hey Fools, it's John Rosevear. Two big pieces of news this past week about Ford, both of which I think will be good for the stock this year.
First, CEO Alan Mulally did what I think he probably should have done a few months ago, he came out and said definitively that he's not going to Microsoft, he's committed to staying at Ford through the end of 2014. That was a good thing. The rumors have been swirling for months that Mulally might end up as Microsoft's CEO, and while everybody at Ford was repeating the party line that he had no plans to leave, everybody knew that party line was really a weak denial with a whole lot of potential wiggle room that really didn't resolve anything.
And it was starting to become a big distraction for Ford whenever Mulally or other senior Ford executives appeared at public events, the question would be asked over and over, and with Ford set to launch its all-new F-150 at the North American International Auto Show in Detroit next week, this distraction needed to be put to bed. So good news that Mulally came out and did that, and good news that Ford's transition plan will continue without any abrupt detours.
It has been expected for a while that Mulally would retire at the end of 2014 and hand off the CEO slot to chief operating officer Mark Fields, who is clearly being groomed for the job right now, having Mulally around until the end of the year raises the odds that the transition will go smoothly and that Fields will be ready to go when he takes over. That's very good news for investors.
Also very good news for investors: Ford's board of directors voted this week to raise the company's dividend. Ford will pay a first-quarter dividend of 12.5 cents per share, up 25% from the 10 cents a share it paid in each quarter last year, and more than double the five cents a share it paid when it first reinstated its dividend in 2012. Ford chief financial officer Bob Shanks said in a statement that "This increase in the dividend provides our shareholders with a regular, growing dividend that we believe is sustainable over an economic or business cycle."
The dividend will be paid on March 3 to shareholders of record at the close of business on Jan. 31. It's good news for the stock for a couple of reasons. First, the obvious: The dividend went up. But second, the idea implicit in Shanks statement, that Ford is committed to a sustainable and growing dividend, is good news for long-term holders of the stock. As we all know, companies that regularly raise their dividend tend to perform well as investments over time.
So two pieces of good news for Ford stock this past week. Thanks for watching, and Fool on.
Fool contributor John Rosevearowns shares of Ford. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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