Ford (NYSE:F) may have sustained an uptrend throughout 2019 but the stock is still a long-term hold for income investors. As long as the dividend yield is around 6% and the stock does not fall by much, the risk of holding this automotive giant is low.
Avoiding a drop in revenue could prove a challenge for Ford. The company reported a 4% drop in U.S. sales in the second quarter. SUV sales fell at a time when this automotive category should still be hot. Although truck sales rose 7.5%, it was not enough to offset the 21.4% drop in car sales.
Ford can count on leading the truck segment through the Ranger and F-Series. A Bronco launch and the ongoing shift towards EV sales is getting little attention from investors. Plus, plans to refresh the SUV lineup at the end of the year. And as Ford pivots away from gasoline cars and increases its product mix towards trucks and SUVs, the stock should hold at least the $10 level.
Your Takeaway
Ford is valued at below eight times forward earnings. Though the upside is limited until unit sales improve, patient investors should continue holding the stock.
Disclosure: I hold shares of Ford.
