Ford Motor May Trim Dividend

Ford Motor Co. (F) may cut its dividend next week for the first time since 1991 as the second-largest auto maker reduces costs in response to declining car and truck sales, analysts said.

The company’s board is scheduled to meet Thursday. Ford’s quarterly payout now is 30 cents a share, costing the company about $2.17 billion a year.

“I wouldn’t be surprised to see a 50% cut,” said Rod Lache, a Deutsche Banc Alex. Brown auto analyst. He called reducing the dividend “an important thing to do.”

Ford spokesman Todd Nissen declined to comment on whether Ford’s board might cut the payout.

Last month’s terrorist attacks further chilled U.S. demand for new vehicles and raised marketing costs as auto makers boosted customer incentives. Ford has lost U.S. market share this year as its sales through September fell 11%.

The company’s stock has declined 25% this year, more than the shares of General Motors Corp. (GM) and DaimlerChrysler (DCX), and Ford expects to report a third-quarter loss after losing $551 million in the previous quarter.

Ford hasn’t lowered its dividend since 1991, when the payout, adjusted for stock splits since then, was cut to 20 cents a share from 37.5 cents.

Just last year, the company undertook a recapitalization in which it distributed billions of dollars in excess cash to shareholders.

At Ford’s current stock price, its annualized dividend yield is 6.8%, far above current money market rates. Assuming Ford’s stock remains near its current level the yield would decline, of course, if the dividend were cut.

Ford closed at $17.67 on Friday, up 43 cents, on the NYSE.