Bloomberg News

Ford’s Next Dividend Boost Could See Family Reap $34 Million (2)

January 08, 2014

Ford Motor Co. (F:US), poised to boost its quarterly dividend for the second time in two years, may push it to 12 cents a share for an annual payout of at least $34 million to members of the founding family that controls the automaker.

Ford, which currently pays shareholders 10 cents, could boost that amount tomorrow and its shares may begin trading with the new distribution starting Jan. 28, according to Bloomberg analysts’ projections (F:US). The forecasts are based on criteria including company guidance, dividend history, regression analysis and put-call parity.

Ford last month said pretax profit rose to about $8.5 billion in 2013 as the second-largest U.S. automaker logged its best sales in its home country in six years and reported record deliveries in China. The rising fortunes of the company led by Chief Executive Officer Alan Mulally cleared the way for resuming a quarterly dividend in 2012 after a five-year hiatus.

“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,” Kevin Tynan, an auto analyst for Bloomberg Industries, said by telephone. “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 family members including Executive Chairman Bill Ford, great-grandson of 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.

Family Payout

Bill Ford, 56, held 4.44 million Class B shares as of Feb. 1, according to the company’s annual proxy filing last year. A 12-cent dividend would boost the annual payout for those holdings to $2.13 million. Including the 14.6 million common shares that he held as of Feb. 1, the chairman would stand to collect about $9.16 million per year with the dividend forecast by Bloomberg analysts.

Edsel Ford, the 65-year-old director who also is a great-grandson of the company’s founder, held 3.16 million common shares and 5.24 million Class B shares as of Feb. 1. A 12-cent dividend would boost the total annual payout for those holdings to $4.03 million.

More than one-third of Ford shareholders voted in favor of a proposal to strip the founding family of its 40 percent voting control of the company and move to one vote per share during its annual meeting in May. While that was the most support the measure has received since it was first proposed in 2005, it was rejected almost 2-to-1.

Dividend Strategy

“Our strategy is to provide a regular, growing dividend that is sustainable,” Bob Shanks, Ford’s chief financial officer, told reporters last month in New York. He declined to say whether the company would boost its payout this year.

Jay Cooney, a Ford spokesman, today said the dividend is a board matter that the company doesn’t discuss publicly.

General Motors Co. (GM:US), the largest U.S. automaker, is in a better position to consider paying a dividend this year, Chief Executive Officer Dan Akerson said last month. The U.S. Treasury sold its final shares of the Detroit-based company in December.

Ford ended a dividend drought by declaring a 5-cent payout in December 2011, then doubled it in January 2013. Standard & Poor’s became the last of the major ratings companies to rate the Dearborn, Michigan-based automaker investment grade in September last year.

Ford avoided the bankruptcies that befell the predecessors of GM and Chrysler Group LLC because it borrowed $23.4 billion in late 2006, less than four months after Mulally arrived from Boeing Co. The automaker put up all major assets, including its blue oval logo, as collateral. It recovered control of those assets in May 2012 after Moody’s Investors Service followed Fitch Ratings in upgrading Ford’s debt out of speculative grade.

Mulally Staying

Mulally, who had been a candidate to succeed retiring Microsoft Corp. CEO Steve Ballmer, yesterday told Associated Press that he has bowed out of that race.

“I would like to end the Microsoft speculation because I have no other plans to do anything other than serve Ford,” Mulally, 68, told the AP in an interview yesterday. Mulally said he will stay with Ford through this year.

Ford rose 1 percent to $15.54 at the close in New York. The shares advanced 19 percent last year as the Standard & Poor’s 500 Index gained 30 percent.

To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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Companies Mentioned

  • F
    (Ford Motor Co)
    • $16.58 USD
    • 0.05
    • 0.3%
  • GM
    (General Motors Co)
    • $34.03 USD
    • 0.18
    • 0.53%
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