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Ford reinstates quarterly dividend after five-year absence

December 8, 2011 | 10:10 am

William clay ford

Ford Motor Co. has reinstated its quarterly dividend after cutting the payment more than five years ago as it prepared to navigate a turbulent economy.

Ford will pay 5 cents per share to holders of Class B and common stock as of Jan. 31, 2012. The payment will be made March 1.

“We have made tremendous progress in reducing debt and generating consistent positive earnings and cash flow,” said Bill Ford, Ford’s executive chairman. “The board believes it is important to share the benefits of our improved financial performance with our shareholders.”

He said reinstating a quarterly dividend reflected confidence Ford's board of directors has in the automaker's financial prospects. It has posted 10 consecutive profitable quarters.

"This is a positive sign not only for Ford, but for the entire automotive industry, which is recovering after a painful setback from bankruptcies and recalls," said Scott Painter, chief executive of auto information company TrueCar.com.

"Ford has had an impressive run improving its market share more than a full percentage point since 2009," Painter said. "But Ford needs to remember that building products consumers will buy is the catalyst to a profitable and healthy automaker."

Ford shares dipped 9 cents to $10.99 in midday trading.

The automaker mortgaged most of its assets to borrow $23.5 billion in 2006. It used the funds to restructure the business so that it could weather the economic downturn and eventually return to a growth mode. In the process, Ford sold off its Land Rover, Jaguar and Volvo brands and shut its Mercury division.

The strategy allowed the company to avoid the bankruptcies and federal bailouts that saved General Motors Co. and Chrysler Group. It also gave the automaker breathing room to focus on developing global vehicle platforms and components that would achieve economies of scale and support its core Ford brand. The company is now working to rebuild the Lincoln nameplate.

The automaker has whittled away at the debt, slicing it to $12.7 billion by the end of the third quarter from $26.4 billion at the end of the same period a year earlier.

In October Standard & Poor's Ratings Services raised Ford’s corporate credit rating to BB+ from BB-. That puts the company just one notch below an investment-grade rating, which is an important measure of corporate health and would reduce the automaker's borrowing expenses

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-- Jerry Hirsch
Twitter.com/LATimesJerry

Photo: Bill Ford, executive chairman of Ford Motor Co. Credit: Associated Press

 

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