Ford (NYSE:F) shares are a disappointment. The stock is stuck in a narrow trading range of between $8.50 and $9.50. And even though the stock did not return ~30% like Tesla (NASDAQ:TSLA) did, income investors, get compensated with a dividend that yields over 6%.
Valuations have always been compelling for Ford stock. Markets continue to discount the stock because of continued execution problems. The Lincoln Navigator is a vastly improved vehicle as is the Ford Explorer. But supply constraints due to production issues are hurting quarterly results.
Ford needs to figure out and to resolve the operational issues that plague its gas-powered vehicle production. By late next year, customers will take the order of the Mustang Mach-E SUV.
The first edition model is sure to have some production issues. Ford will need to act fast in fixing any issues promptly. It must also increase the production of the EV (electric vehicle) to earn the use of the Mustang name on the EV.
Ford might struggle to break out and trade above $10. The sentiment is too negative, despite analysts setting a $10 price target on the stock.
Regardless of the stock underperformance, income investors should continue holding the stock for the regular quarterly dividend.
Disclosure: the author owns shares of Ford.
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