Ford Fattens Dividend by Tapping Cash Pool

After coming up empty in its long hunt for a big acquisition, Ford decided Thursday to spend part of its enormous cash pool on higher dividends instead.

Ford said it will increase its dividend 18% in the fourth quarter to 65 cents per share, setting a company record for a quarterly dividend pay-out.

The increased dividend, payable Dec. 1 to shareholders of record on Oct. 31, comes at a time when Ford is in excellent financial shape--it is sitting on a cushion of $7.1 billion in cash and marketable securities.

Seeks Acquisitions

The nation’s No. 2 auto maker has been looking for large acquisitions in the high-technology and financial services fields in order to diversify away from its traditional dependence on the highly cyclical auto market, but so far it has not found a company that matches its criterion. So while it continues to search, the savings account has continued to grow.

Meanwhile, Ford is likely to post a net income of about $490 million for the third quarter. In fact, Ford seems to be in much better financial health than its major cross-town rival, General Motors. Analysts now predict that for 1986, Ford will report higher annual net earnings than GM for the first time since 1924.

Michael Luckey, auto industry analyst for Shearson Lehman Bros., predicted that Ford will earn $2.9 billion this year, compared to $2.5 billion in 1985, while GM’s net income attributable to its common stock--excluding earnings for its Class H and Class E subsidiary stocks--will total about $2.8 billion, down sharply from last year’s net income of $3.99 billion.

Two May Beat GM

Yet GM, which has been burdened by the heavy costs of its discount financing program, may be even more embarrassed by the third-quarter tally.

Luckey predicted that GM’s third-quarter net will be lower than those of both Ford and Chrysler; a Chrysler spokesman said he does not believe that Ford and Chrsyler have ever both beaten GM in the same quarter.

Ford’s financial position has strengthened despite a slight dip in its 1986 car sales. But analysts say it has been helped by several factors--it is selling more expensive vehicles this year; its share of the booming light-truck market has increased; its overseas profits have benefited from more favorable currency exchange rates, and it has slashed costs and improved the efficiency of its manufacturing operations.