Ford to Reinstate Shareholder Dividend
Ford Motor Company announced on Thursday that it is reinstating a shareholder dividend after five years without one. The company said it will begin paying a dividend of 5 cents per share next March, and will maintain the dividend payments moving forward, noting that it could sustain the dividend even if it faced another downturn in the future. The company had said before that it would not reinstate a dividend until its credit rating was upgraded to investment grade, but has reconsidered that stance in recent weeks.
The last time Ford paid a shareholder dividend was September 2006, the same month that its current CEO, Alan Mulally assumed control of the nation’s No. 2 automaker. Mulally is credited with strong leadership that allowed Ford to be the only one of Detroit’s Big Three carmakers to survive the financial crisis of 2008 without requiring a massive government bailout. The company managed to avoid bankruptcy by borrowing $23 billion from creditors, and through Mulally’s “One Ford” plan, in which the carmaker simplified and unified its product development and supply chains.
Considered the strongest of Detroit’s Big 3, Ford posted a profit for the tenth quarter in a row in the third quarter, and company officials expect that trend to continue in the foreseeable future. Based on those expectations, the company believes it to be very important to give back to its shareholders, awarding their loyalty through tough times, sooner rather than later.