Ford Motor Co. ( F ) increased its dividend for the first quarter of 2014 by 25% to 12.5 cents per share. The announcement of the dividend hike led to a 3.1% surge in its share price.
The new dividend will be paid on Mar 3, 2014 to holders of the outstanding Class B and common stock. The record date for the quarterly dividend is Jan 31, 2014.
The dividend hike was driven by the strong operating performance of Ford in 2013. The company tries to provide ample, sustainable returns to shareholders. In fact, this is the second dividend hike in two years. Ford had increased the dividend to 10 cents from 5 cents per share in the first quarter of 2013 as well.
Ford's financial strength is increasing due to success of the One Ford plan. The company generated positive cash flows from operations in the last 14 quarters. Moreover, in the first nine months of 2013, the company's liquidity improved by $3 billion. The improving financial strength is helping the company to increase capital deployment via dividend payments.
The increased dividend amounts to a dividend yield of 3.2% per annum, based on the closing share price of $15.84 as of Jan 9, 2014. The old dividend translated into an annual yield of 2.5%.
Ford's total sales in the U.S. in 2013 amounted to 2,493,918 units, buoyed by the annual sales record set by Ford Fiesta, Fusion and Escape. The company has generated year-over-year growth in sales in every month since Nov 2012.
Ford also set a new sales record in China in 2013 with annual sales of 935,813 wholesale vehicles. This translates into a 49% surge from 626,616 vehicles sold in 2012.
Ford is one of the major automobile producers in the world, along with General Motors Company ( GM ), Honda Motor Co., Ltd. ( HMC ) and Toyota Motor Corporation ( TM ). Currently, Ford has a Zacks Rank #5 (Strong Sell).
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