Ford - Value Play?

Written by The Dividend Guy on September 16, 2006

I have to admit, when I see what has happened to the share price of a stock like Ford (F), I start to take a bit of notice. Although I do not follow the auto industry very closely, it has been pretty hard not to notice all the crap that Ford has been going through. In the past week alone, they have announced that they will be cutting some 14,000 jobs, closing plants, and most importantly to me, cutting its dividend.

That last move simply makes me want to stay far away. It is not like they simply did not choose to raise the dividend, they are STOPPING the payment of their dividend. When one reads between the lines on this, there is simply not enough earnings being generated to warrant a dividend payment and that is trouble. And no earnings means poor share performance in my mind. I am not going to dip, no matter how low it goes


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5 Comments so far

  1. WITY September 17, 2006 7:32 am

    I absolutely agree about F. Best to stay away from any perspective. From a dividend investor’s point of view even more so.

    But this makes me wonder - how do you reason being long GM, which seems to me to be in just about the same situation?

  2. finance girl September 19, 2006 10:06 am

    Yah, I saw the same thing in this morning’s WSJ. Can you imagine having to be an employee in the Detroit Big 3 right now? Talk about depressing, not only is your company in crisis but your own holdings are tanking (e.g. Detriot area real estate, employer stock, etc.)

  3. Tom September 19, 2006 4:28 pm

    I live in Michigan and it seems like every company is being effected by these stupid automakers. Our economy is horrible and it’s very tough to find a job around here seeing every other job is manufacturing/automotive related. Michigan is in a lot of hurt for the next 5-10 years. That’s why I’m moving out this state.

  4. G September 20, 2006 7:06 pm

    I would be will to take the risk, if you have a long time to sit on the stock. If this management plan works, it could mean big profits in the future for Ford.

  5. Pierres Service » Blog Archive » ford - value play? November 29, 2006 9:54 am

    […] ford - value play? … closing plants, and most importantly to me, cutting its dividend. … raise the dividend, they are stopping the payment of their dividend. when one reads … there is simply not enough earnings being generated to warrant a dividend …Read more: here […]

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