Once considered to be one of the best growth companies available on the U.S. stock exchanges, Ford Motor Company (NYSE:F) has grown to substantial size and scale, becoming one of the companies many American investors tend to consider to be an iconic “forever” company to hold as a core portfolio holding for decades.
While the automobile manufacturer did have a periodic battle with insolvency following the financial crisis (as did many firms), requiring a bailout and government investment to stay alive, the company is now doing better than ever, returning significant value to shareholders in the form of a dividend yield which has now breached 5.5%.
Based on most traditional valuation metrics, Ford continues to trade at a significant discount to its peers. The company has a price to earnings (P/E) ratio of 11 and a price to book value (P/BV) ratio of 1.4, providing a huge margin of safety for investors willing to accept the debt-related risks with the firm.
Extrapolating out a 5.5% dividend, in a little more than 12 years, an investor will receive their initial investment back (assuming dividends do not increase and the equity is held for the full 12-year period), making the initial investment essentially cream on top of a continuing income stream which will continue indefinitely, barring any unforeseen macroeconomic events that would hamper the entire industry.
Ford simply has one of the best dividend-value combinations on the NYSE, making this a play income-focused investors should certainly take a look at.
Invest Wisely, my friends.
