Ford Motor Co. (NYSE: F) May Resume Dividends in 2012

Posted by on Jul 5th, 2010

Ford Motor Co. (NYSE: F) may resume dividend payouts on common stock as soon as 2012, according to data from Bloomberg.

Ford recently caught up on paying dividends on preferred stock that it had missed for the last 14 months and the automaker still has to pay off more than $27 billion in debt before resuming the dividend, according to analysts. However, quarterly dividends of $0.05 per share could begin in 2012, a year of head of earlier projections, according to estimates from Bloomberg.

The Detroit automaker removed a key legal hurdle by paying off $255 million in deferred dividends to its Capital Trust II preferred stock alongside a $3.8 billion payment to a trust for union retirees. Now that those dividends have been made current, Ford is free to reinstate a dividend on its common stock and Class B shares owned by the Ford family.

“If you have that kind of cash flow and you’re paying down debt, I could see a dividend maybe a year from now,” said Bernie McGinn, president of McGinn Investment Management in Alexandria, Virginia, a firm that owns 330,000 common Ford shares.

Ford Motor Co. (NYSE: F) eliminated its common-stock dividend on September 15th, 2006 when the company was at $0.05 per share. The company made its last payout to the Capital II Trust in early 2009 and missed payments beginning in April 2009.

“Our priority is to continue to reduce debt and strengthen our balance sheet, and ultimately restore an investment-grade debt rating,” said Mark Truby, a Ford spokesman, said in an e-mail to Business Week. “As we make progress on these objectives, I’m sure our board will evaluate the stock dividend down the road.”