Ford Q2 Earnings Coming Up: Is That Fat Dividend Still Safe?

U.S. legacy automaker Ford F is set to release its second-quarter 2025 report tomorrow, after market close. The Zacks Consensus Estimate for Ford’s Q2 EPS and automotive revenues is pegged at 34 cents and $41.7 billion, respectively. In the trailing four quarters, Ford surpassed EPS estimates on two occasions, missed once and matched on the other.

Investors are now waiting to see if Ford can pull off an earnings surprise this time. But there’s another big question on shareholders’ minds— will Ford be able to sustain its attractive dividend payout, or will rising pressure from tariffs, massive recall costs and deep EV losses force a cut?

Ford’s Dividend Appeal Vs. GM & STLA

One of the main reasons investors still hold on to Ford shares is its attractive dividend yield. The company currently pays a quarterly dividend of 15 cents per share and has increased its payout five times over the last five years. At more than 5%, Ford’s dividend yield is significantly higher than the S&P 500 average of 1.16%. Its current payout ratio stands at about 40%, which might raise concerns for some about how sustainable the dividend really is—especially in a volatile environment.

Ford’s closest rival, General Motors GM, also pays a 15-cent quarterly dividend, but its payout ratio is a more conservative 6%. Facing macroeconomic uncertainty and tariff risks, General Motors paused its share buyback program in Q1—though it resumed repurchases this month. Italian-American auto giant Stellantis STLA went a step further by slashing its 2025 dividend by half compared to 2024, citing financial and geopolitical pressures. Stellantis also halted its buyback plan.

What’s Fueling Dividend Worries?

While Ford doesn’t have a share repurchase program in place, many investors are beginning to question whether its generous dividend is sustainable. And there’s reason to worry. Ford has paused its full-year guidance, warning of a potential $2.5 billion hit from Trump’s tariffs. While it plans to offset $1 billion of that impact, the remaining $1.5 billion—expected to hit in 2025—remains a big overhang.

Additionally, Ford’s Model e division continues to bleed cash. Losses from its EV business widened to $5.07 billion in 2024 due to pricing pressure and heavy investment in next-gen EVs. The company is expected to incur huge losses in its EV business this year as well. Massive spending on IT upgrades, product development and connectivity features is also weighing on cash flow.

Adding to the strain, Ford has been leading the industry in vehicle recalls so far in 2025 and booked a $570 million charge in Q2 for related costs. While the company paid $3.1 billion in dividends last year, supported by $5.9 billion in net income, cash flow for 2025 is expected to drop sharply, raising real questions about how long Ford can keep up its high dividend payout.

Is a Payout Cut Coming? Probably Not Yet

Ford ended Q1 with roughly $45 billion in total liquidity, including about $27 billion in cash. The company has a target of returning 40-50% of its free cash flow to shareholders, showing its commitment to consistent payouts. Its high yield also offers a cushion against stock volatility and appeals to income-focused investors. In fact, what some may overlook is that Ford also has a history of paying out special dividends during strong cash flow years.

Yes, the expected hit to cash flow from tariffs and EV losses could put pressure on Ford’s dividend. But for now, we think the payout is safe. Ford has built a reputation as a dependable dividend stock and is unlikely to cut unless conditions worsen significantly.

As it releases earnings tomorrow, investors will watch not just for tariff-related commentary, but for any signals around the dividend’s future.

The Zacks Rundown on Ford

Ford currently carries a Zacks Rank #3 (Hold) and has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have risen roughly 14% year to date against the industry and sector’s declines. Comparatively, General Motors stock has inched up 0.3% and Stellantis shares have declined 25.7% over the same timeframe.

YTD Price Performance Comparison

The Zacks Consensus Estimate for Ford’s 2025 EPS and automotive sales is pegged at $1.14/share and $161 billion, implying a decline of 38% and 6.4%, respectively. See how the EPS estimates have been revised in the past 60 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research