Ford’s 8% Yield Is an Idiot Test

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Transcript:

[00:00:04] Doug McIntyre: The Ford has an 8% yield right now. now the stock was 25 a year and a half ago, which means that the yield was it’s four semi-normal. Yeah. But here’s the question. If you’re have a noose coming around your neck because of, you can’t sell cars and you basically can’t sell cars in China, you don’t have a very big footprint outside the United States.

[00:00:32] Doug McIntyre: I know that Ford, costs for in the United States with tariffs is not as bad as for other people. ’cause they make a lot of their cars and parts here.

[00:00:41] Lee Jackson: They do.

[00:00:43] Doug McIntyre: I don’t see that dividend lasting. I mean, I don’t see this being an 8% yield stock for more than another couple of months.

[00:00:51] Lee Jackson: No. Well, you wrote on this and, and all of your points were valid because there’s, there’s gonna be a, a, a time when it, it’s just too [00:01:00] much of a drag on their CapEx, when they’re having to pay so much in a dividend when they’re gonna try to, re-shore some of their production from Canada and Mexico and that that’s gonna take a ton of money and that’s expensive.

[00:01:16] Lee Jackson: And, and again, even if you cut it in half, even if you cut it to 50 cents, it’s still 4%, which is more than most companies pay.

[00:01:25] Doug McIntyre: Oh, listen, even at half, it’s an impressive dividend. But yeah, the current yield is a factor of the drop in the stock price more than the fact they just, it’s not like Altria where they can afford to be generous.

[00:01:38] Doug McIntyre: Ford happened. It’s an accident of stock market history that they’re at this level right now. So if I own Ford right now, I ask the question, do I like Ford at $10 with a 4% yield? I, I like Ford at [00:02:00] $10 with an 8% yield. I personally think that, I just don’t think it’s gonna last. So that, that’s, that’s the thing that worries me.

[00:02:09] Lee Jackson: Well, and the stock will take a, if they do cut the dividend like it always does, the stock will take it, get ripped initially, but, but then when it does get ripped, it may make that 4% dividend,

[00:02:20] Doug McIntyre: 5%. It it, right. that’s the thing I love about dividends is the stock gets killed when you drop the dividend, the stock then goes down and the yield goes back up.

[00:02:29] Doug McIntyre: It’s a miracle of modern investing. But right now, I’m out of, I, I don’t like Ford. I don’t, there are times when I did like Ford. I don’t like Ford. They’re gonna put five to five and a half billion dollars into their EVbusiness this year. oh. In the first quarter, about 4% of their car sales were EVs 4%.

[00:02:51] Doug McIntyre: After putting tens of billions of dollars into EVs. 10%, Nope. 4% of your US car sales [00:03:00] are. S the gas guzzling F1, F series, mostly the F-150 is 38% of your US sales. So look, you’re a legacy car company. You’re a fossil fuel company. Please do not have commercials, Mr. Farley. Do not go on tv. Do not go to shareholder meetings.

[00:03:24] Doug McIntyre: Do not talk to the press and say that you’re an EV company. You’re heading in the right direction in EVs because you’re not. You’re a gas powered. You’re the same car company you were when Henry Ford started. You, okay? They are. And when who we called HF The Deuce, Henry Ford II came after the second World War, he died in the seventies. You were a car company that used gasoline then you are now have another Ford in charge, yet another Ford. You are still a gas powered car company. I am begging you [00:04:00] stop talking about the fact that you’re making EVs.

[00:04:03] Doug McIntyre: How many EVs do you think they sold a day in the first quarter? Nationwide? EVs a day. A hundred, 200. They do all that work across the whole country. All their dealers, they sold 200. They sold 200. Oh my god. Can you imagine making a 20, $30 billion investment in a business in your big car company? And they come into the CEO’s office.

[00:04:28] Doug McIntyre: How are we doing today? Well, we, sold 225 EVs across our 3000 dealers in the 50 50 states. And it’s like, yeah, we’re really Oh, roaring in there, baby. We’re making No,

[00:04:40] Lee Jackson: that’s not a big selling point. Well. Ford. That’s interesting. It’ll be interesting to see how the summer goes for forward because it’s kind of a make or break time for them, so it’ll be interesting.

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