On the Dash:
- Ford’s 2025 dividends of 75 cents per share far exceed its 11 cents per share in earnings, raising sustainability concerns.
- Dividend payments of $1.8 billion already exceed the company’s $1.3 billion in adjusted free cash flow for the first half of 2025.
- Tariffs are expected to cut $2 billion from pretax earnings, adding pressure on profits and dividend sustainability.
Ford Motor plans to pay shareholders 75 cents per share in dividends this year, including a 15-cent supplemental payment made in March, even as the company struggles with falling profits and rising costs. According to a report by The Wall Street Journal, the planned dividend exceeds the automaker’s earnings so far in 2025, raising questions about sustainability.
So far in 2025, Ford has reported just 11 cents per share in earnings, while analysts expect full-year earnings of 78 cents, down nearly half from last year. Trade tariffs are expected to cut $2 billion from the company’s pretax earnings, higher than earlier projections.
The dividend helps support Ford’s stock price and appeals to investors looking for income. However, keeping payouts high limits the company’s cash for investing in new projects or reducing debt. Ford’s dual-class share structure gives the Ford family 40% of voting power while owning just 2% of the shares, meaning dividends also play a key role for other shareholders.
To support the dividend, Ford uses a special cash-flow calculation called “adjusted free cash flow.” This starts with the cash the company makes from its car business, subtracts spending on factories and equipment, and then adjusts for costs such as layoffs, pensions, and other cash payments. Ford also adds some cash from its financing business, Ford Credit. Using this measure, the company aims to pay out 40% to 50% of cash flow to shareholders.
Even so, the payout already exceeds cash flow. In the first half of 2025, Ford generated $1.3 billion in adjusted free cash flow but paid $1.8 billion in dividends. Even if the company hits its cash-flow targets for the full year, keeping the dividend unchanged would push payouts slightly above its stated target.
Ford has paused dividends during past crises, like the 2008-09 financial collapse and the 2020 pandemic. While the company is likely to maintain its dividend this year, it is stretching its resources to do so.
