Ford’s Hiked Dividend Implies a Big Payoff for the Ford Family
On Thursday, Ford (NYSE:F) has declared a quarterly dividend of $0.12 cents, a boost over its prior dividend of about 25 percent. This isn’t wholly uncommon, as many public companies raise their dividends with some degree of regularity. While that’s certainly good news to Ford’s shareholders, it potentially holds especially good tidings for one family in particular.
The founding Ford family, which is still deeply entwined with the automaker, reportedly stands to make at least $34 million as a result of Ford’s dividend boost, Bloomberg is reporting. “[Bloomberg’s] forecasts are based on criteria including company guidance, dividend history, regression analysis and put-call parity,” the site explained.
“You’re getting capital back to the shareholders, you’re paying the family and you’re showcasing your financial strength, so there’s a lot of upside,” said Kevin Tynan, who is an auto analyst for Bloomberg Industries. “Even as the volume growth dissipates a little bit and you still have expensive new product launches, 12 cents and even 15 cents can probably be maintained without too much harm.”
Ford’s pretax profit increased to roughly $8.5 billion in 2013 – the automaker’s best sales year domestically in six years, and with record deliveries achieved in China. Members of the Ford family, including Executive Chair Bill Ford who is the great-grandson of the company’s founder Henry Ford, are the exclusive owners of 70.9 million Class B shares, a special class of stock that gives them 40 percent voting power, Bloomberg said.
Bob Shanks, Ford’s CFO, told reporters back in December that Ford’s goal was to “provide a regular, growing dividend that is sustainable,” though he declined to comment on whether Ford was planning to hike the dividend this year, which apparently, it has. Ford spokesperson Jay Cooney said on Thursday that the dividend is a board matter that the company doesn’t discuss publicly.