This morning, automaker and Best Ideas Newsletter holding Ford (click ticker for report: ) announced that it will increase its quarterly dividend by 100%, to $0.10 per share. We predicted Ford would resume its dividend, and the raise comes as little surprise to us, given Ford’s improved capital structure and eagerness to return cash to shareholders. We expect to update our dividend report on Ford soon.
At its current price, the annual dividend yield is now approximately 2.9%, while the yield on cost of those who invested alongside Valuentum is substantially higher at approximately 3.7%. Not only does the yield provide investors with a stronger income stream, but the increased dividend reflects management’s confidence in the business going into 2013, despite a challenged European segment.
We continue to hold shares of Ford in the portfolio of our Best Ideas Newsletter, and we think this event is just another catalyst toward the firm converging to our fair value estimate.