Ford Increases Its Dividend to 50 Cents a Share

Flush with cash from its most profitable year ever, Ford Motor Co. said Thursday that it is increasing its quarterly dividend on its common stock by 25%, to 50 cents per share, the company’s highest dividend level since 1980.

The 10-cents-per-share increase, payable March 1 to shareholders of record Jan. 30, is being issued as a result of what Ford called “the favorable outlook for the company’s earnings and cash position.”

Ford’s U.S. car sales rose 26% in 1984, and analysts expect the company to post record earnings of more than $2.9 billion for the year. Auto sales are also expected to remain strong through at least the first half of this year.

Ford’s dividend action helped boost the value of the company’s stock on the New York Stock Exchange, where Ford closed Thursday at $46, up $1.75 per share.

$18 Million Per Quarter

With 181.4 million shares outstanding, the hike in the dividend will cost Ford more than $18 million each quarter, and a good chunk of that money will go directly to the Ford family.

The extra 10 cents per share will mean another $156,000 in dividend payments for Henry Ford II, Ford’s former chairman and a grandson of founder Henry Ford, while his younger brother, William Clay Ford, currently Ford’s vice chairman, will receive an additional $275,000 in dividends.

The increase was the first change in Ford’s dividend outlays since last spring. In April, 1984, as the auto industry’s recovery began to build, Ford raised its dividend from 30 cents to 40 cents per share, six months after a 3-for-2 stock split was declared in the form of a 50% stock dividend.

But Ford’s dividend is still below its pre-recession peak of $1 per share (66.7 cents per share accounting for the 3-for-2 split) reached in 1979 and 1980.

General Motors Corp. and Chrysler Corp. have also increased their payments to shareholders since the recovery gained steam last year.

Chrysler, which suspended dividend payments during its financial crisis in order to obtain federal loan guarantees, paid out its first post-crisis dividend of 15 cents per share last April, and is now paying 25 cents per share.

GM, which has paid $1.25 per share since the second quarter of 1984, offered an extra dividend, payable last December, in the form of shares of its new class E stock from its Electronic Data Systems Corp. subsidiary.