Ford's Dividend Payment Raises Concerns Amid Tariff Impact and Earnings Decline

Ford Motor reported 11 cents of EPS this year, but paid out about four times that in cash dividends. The company is on track to pay a total of 75 cents a share, including a 15-cent supplemental dividend. Tariffs will cut $2 billion from this year's pretax earnings, up from a previous estimate of $1.5 billion.

Ford Motor Company (NYSE: F) has been under scrutiny for its dividend policy, which has seen the company pay out significantly more in dividends than it has earned this year. The automaker reported earnings per share (EPS) of 11 cents so far in 2025 but is on track to pay out 75 cents a share in dividends, including a 15-cent supplemental dividend in March [2]. This payout is almost four times the company's reported earnings per share.

The dividend payout is set to be paid on September 2, 2025, to shareholders of record on August 11, 2025. This represents a $0.60 dividend on an annualized basis and a dividend yield of 5.2% [1]. The company's payout ratio is currently at 76.92%, indicating a significant portion of its earnings is being distributed as dividends.

Ford's dividend policy is being questioned amid the impact of President Trump's tariff policies on its business. The company has estimated that tariffs will cut $2 billion from this year's pretax earnings, up from a previous estimate of $1.5 billion [2]. This increase in the impact of tariffs raises questions about the sustainability of the company's dividend policy.

While maintaining a high dividend yield can be beneficial for income-oriented investors, it also raises concerns about Ford's ability to reinvest in the business or pay down debt. The company has shown a willingness to suspend its dividend in times of turmoil, as it did during the 2008-09 financial crisis and again during the pandemic in 2020.

Ford's dividend policy is further complicated by its dual-class share structure. Ford family members own Class B shares that have 40% of the voting rights but represent only 2% of the total shares outstanding. Class B shareholders received $55 million in dividend payments last year [1]. This structure may influence the company's decision to maintain its dividend policy despite the financial headwinds.

As Ford continues to navigate the challenges posed by tariffs and other external factors, investors will be closely watching the company's dividend policy and its ability to balance shareholder payouts with reinvestment in the business.

References:
[1] https://www.marketbeat.com/instant-alerts/filing-ford-motor-company-f-stock-position-lifted-by-northern-trust-corp-2025-08-20/
[2] https://finance.yahoo.com/news/ford-dividend-looks-hard-maintain-093000982.html