Ford's Long Road: Why its Consistency Keeps me Invested

Ford Motor Company might be the biggest bear in my portfolio, yet I've held this stock off and on for over 30 years and still own shares today. Despite its lackluster performance, I believe Ford is a company worth owning, and its recent dip in share price might present a good opportunity.

I have to admit, my belief in Ford comes with a grain of salt. Nearly 20 years ago, when OneShare was a thing, I bought a share of Ford for my nephew, complete with a framed stock certificate, because he was showing interest in investing. That share cost a little over $9 back then, and today, it's trading around $11 a share.

Granted, it's not all bad. The stock has hit highs in the mid-20s over the years. But overall, it's been a sideways performer. It's also no dividend aristocrat, although you'd think it might be, having suspended its dividend in 2020 during the pandemic and only restoring it in Q4 2021. Still, with a current yield of 5.76%, the dividend offers an attractive opportunity to earn while you wait.

Generally, my approach to trading Ford has been to buy shares under $12 and sell them once they exceed $15. Rinse and repeat. Ford's historical data over the past 40+ years shows consistent cycles, so I don't anticipate any significant stock runs soon. Therefore, I view Ford as a place to simply park money for the yield and occasional gains as it presents a fair overall return beyond just the dividend.

Think of it as a "savings account with benefits." Sure, Ford could suspend its dividend again—a valid concern given their last earnings call and forward guidance, which weren't stellar despite beating top-line and earnings per share estimates. However, considering Ford's current position, I believe the dividend is safe for the foreseeable future. The recent drop in share price stems from Ford's less than impressive outlook, which didn't inspire investor confidence, leading to a 6% dip in post-call trading.

One area of concern and nervousness is Ford's EV division, which has still shown impressive growth despite the overall downward pressures in the EV market. Even though the EV division only accounts for 3% of Ford's overall business, it could still impact revenues, especially as it continues to be a loss-maker. Any significant drop in EV sales in the near future can potentially negate any strides made in more profitable areas of their business, becoming a major drag on their bottom line.

The bottom line for me is that whenever I evaluate Ford's stock, despite its perpetually stagnant share price, what stands out, at least in my opinion, is Ford's consistently strong position. Something I think many investors ignore. Over the years, management has navigated tough waters in a highly competitive market, keeping the company moving forward, maintaining impressive cash levels, and keeping debt relatively low. Even back in 2008, when the government bailed out the ailing auto industry, Ford opted out and pulled through with flying colors.

Ford's stock may never be the most thrilling investment I ever own, but I believe it continues to have value despite some forward-looking hurdles. It holds a place in my portfolio because, while it may never make me rich, I'm confident it won't make me poor either. Sometimes a steady and reliable investment, despite many ups and downs, is just what you need to balance out the highs and lows of a more volatile market. For me, Ford offers that stability, making it a worthwhile investment to continue to hold.

When I say, "Ford's not going anywhere any time soon," sure, I may be saying Ford isn't going through the roof, but I am also saying it's not going through the floor either.

Disclaimer: This information is for entertainment purposes only and should not be considered as financial advice. It is important to always do your own due diligence before making any investment decisions or to seek the counsel of a certified financial planner or other financial professional. Jim Bauer currently holds shares of Ford Motor Company stock and intends to buy more shares following the publication of this article.

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