Ford Motor Company (F 0.41%) is one of the country's top automakers. The company sold almost 2 million vehicles in the U.S. in 2023, up 7% from the prior year, and its best sales total since 2020. Ford sells the country's No. 1 truck brand (the F-Series) and is also a leader in gas-powered cars.
Although gas-powered vehicles are a big driver of Ford's sales, the company has invested heavily in developing new hybrid and fully electric vehicles (EVs). It posted record EV sales in 2023 (more than 72,000 vehicles, an 18% increase from 2022). It was the No. 2 EV brand in the country.
Ford's growing EV sales could eventually drive profit growth for the car company. The EV-powered upside potential makes the iconic automaker a good stock to consider investing in over the long term.
Here's a step-by-step guide on how to buy shares of Ford, followed by some factors to consider before investing in the automotive stock.
How to invest
How to invest in Ford
You can buy shares of Ford in any brokerage account. If you still need to open one, these are some of the best-rated brokers and trading platforms. Here's a step-by-step guide to buying Ford stock using the five-star-rated platform Fidelity.
Fidelity makes it easy to buy stocks. Its website offers a video tutorial and a step-by-step guide. Here's a screenshot of how to place a stock trade with Fidelity:
On this page, fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The ticker symbol (F for Ford).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.
Once you complete the order page, click the "Place Order" button at the bottom and become a Ford shareholder.
Alternative ways to invest
Alternative ways to invest in Ford stock
Instead of buying shares of Ford directly, you can passively invest in the automotive company through a fund holding its shares.
Ford is a large company by market capitalization. It's a widely held stock. Ford is in several stock market indexes, including the S&P 500 index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Ford stock.
Exchange-Traded Fund (ETF)
According to ETF.com, 219 ETFs held 478.2 million shares of Ford as of mid-2024. The Schwab U.S. Dividend Equity ETF (SCHD -0.62%) owned the most Ford shares among ETFs at 91 million. However, it had a relatively small portfolio weighting in the fund at 1.6% of its holdings.
Other ETFs had greater exposure to Ford stock. However, it still had a relatively modest portfolio weighting in those funds (6.7% was the highest, according to ETF.com), and they were relatively small funds.
Investors may want to invest in a larger ETF with a small allocation to Ford or purchase shares directly to gain exposure to the company's upside potential. They could also consider investing in an electric vehicle ETF if their main reason for buying shares is its EV-powered upside potential.
Should I invest?
Should I invest in Ford?
Before buying Ford stock, you must determine if its shares are a good investment. Here are some factors to consider before investing in Ford stock:
Profitability
Is Ford profitable?
Ford is a profitable company. On a generally accepted accounting principles (GAAP) basis, Ford reported $1.8 billion of net income in the second quarter of 2024, a roughly $100 million decline from the prior year period. That pushed its first-half net income to $3.2 billion, a roughly $500 million decline from the same period in 2023.
The company expects 2024 to be a profitable year. It expects to deliver $10 billion to $12 billion of adjusted earnings before interest and taxes and $7.5 billion to $8.5 billion in adjusted free cash flow. That strong profit comes even though its EV division is expected to lose between $5 billion and $5.5 billion in 2024.
Revenue
Ford's revenue
As one of the largest automakers in the world, Ford generates a lot of revenue. The company reported $90.6 billion of revenue in the first half of 2024, a $4.2 billion increase from the prior year period.
Revenue
Valuation
Ford's valuation
Ford trades at a relatively low valuation. In mid-2024, shares of Ford traded at a forward price-to-earnings (PE) ratio of slightly more than five times. That was dirt cheap compared to the broader market. The S&P 500's forward PE was more than 22 times while the Nasdaq-100 fetched almost 28 times forward earnings, making Ford look like a good value investment.
Dividends
Does Ford pay a dividend?
As of mid-2024, Ford paid dividends to its investors. However, the company has a rather spotty track record as a dividend stock. Ford reinstated its dividend towards the end of 2021 after an almost two-year suspension due to the COVID-19 pandemic's impact on its operations. The company also suspended its dividend in 2006 and didn't reinstate a payout until 2012.
In addition to paying its regular dividend, Ford declared a special supplemental dividend in early 2024. Driving that additional payout was its strong free cash flow and the company's target to return 40% to 50% of its adjusted free cash flow to shareholders.
Stock splits
Ford stock split history
Ford has completed six stock splits in its history:
| Date | Type of stock split |
| July 1994 | 2-for-1 |
| January 1988 | 2-for-1 |
| June 1986 | 3-for-2 |
| December 1983 | 3-for-2 |
| May 1977 | 5-for-4 |
| May 1962 | 2-for-1 |
Related investing topics
The bottom line on investing in Ford stock
Ford is an iconic automaker that makes most of its money selling gas-powered vehicles. However, its best days might not be in the rearview mirror. The company has invested heavily in shifting its product lineup to more environmentally friendly vehicles. The investment could pay off by helping Ford re-accelerate its profits in the coming years. With the company's shares seemingly trading for a discounted price, Ford stock could wind up being an enriching investment.
FAQ
Ford stock FAQ
Can you buy Ford stock directly?
Ford Motor Company is a publicly-traded company. Anyone can buy shares of Ford directly through their brokerage account. The vehicle manufacturer trades on the New York Stock Exchange (NYSE) under the ticker "F."
Is it worth it to invest in Ford?
Ford stock hasn't been a worthwhile investment in recent years. As of mid-2024, Ford's total return had underperformed the S&P 500 over the past one-, three-, five-, and 10-year periods. Its best total return during that time has been 5.1% annualized over the past five years, woefully underperforming the S&P 500's 14.8% annualized total return.
However, that past performance doesn't mean Ford can't shift gears and deliver better performance in the future. The company is working to improve the underlying quality of its vehicles and its profitability. Its Ford+ strategy aims to lay the foundation for profitable long-term growth, which could drive its stock price higher in the future.
Is Ford a good stock for long term?
Ford has underperformed the market over the long term (-0.3% annualized total return over the last 10 years vs. 12.8% for the S&P 500). However, that doesn't mean it will underperform in the future. Ford's heavy investment in EVs and focus on growing its profits through Ford+ could give it the power to produce higher total returns in the coming years. Meanwhile, it trades at a very low valuation relative to the broader market.
Has Ford stock ever split?
Ford has completed six stock splits. Its last stock split was a 2-for-1 split in 1994.
Matthew DiLallo has positions in Ford Motor Company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
