Ford to Double Dividend Payout

By Matt Egan Markets FOXBusiness


In the latest sign of Ford’s (F) dramatic turnaround, the auto maker revealed plans on Thursday to double its quarterly dividend.

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Shares of the No. 2 U.S. auto maker rallied about 3% on the move, which represents a show of confidence in its business prospects.

Ford said its board of directors signed off on a plan to boost the company’s quarterly dividend to 10 cents per share from 5 cents.

The first-quarter dividend will be payable on March 1 to shareholders of record on January 30.

“Our ability to double our dividend in one year is a testament to our One Ford plan, which has enabled us to maintain a solid balance sheet, while at the same time growing our business to provide our shareholders with more return on their investments,” Bob Shanks, Ford’s chief financial officer, said in a statement.

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To demonstrate its healthier balance sheet, Ford said it increased its liquidity position through the first three quarters of 2012 by $2 billion.

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The auto maker also continues to benefit from healthier industrywide auto sales, logging 10 straight quarters of positive automotive operating-related cash flow.

Unlike General Motors (GM) and Chrysler, Ford avoided a bankruptcy filing during the 2008 financial crisis, but the auto maker was still slammed by the economic chaos that ensued.

Wall Street cheered the dividend news, bidding Ford’s stock 2.97% higher to $13.87 ahead of Thursday’s opening bell.

Ford’s stock has rallied about 15% over the past year, including 42.5% over the past six months alone.

A slew of major companies have announced plans to hike their dividends in recent months in an effort to return cash to shareholders. According to S&P Dow Jones Indices, 1,262 dividend increases were reported in the fourth quarter of 2012, representing a 94.5% year-over-year gain.