Ford Motor Company (F): Examining Real Returns and Long-Term Viability

Highlights

• Ford delivers a 4.56% dividend yield, attractive to income-focused investors
• Five-year performance of 85% masks underlying business weakness
• Operating margins averaging just 2.5% reveal profitability constraints
• The company’s relevance as a high-quality investment remains questionable

Understanding Ford’s Returns in Context

Since its establishment in 1903, Ford Motor Company (NYSE: F) has become synonymous with American automotive manufacturing. The iconic F-Series truck lineup holds the distinction of being America’s best-selling vehicle class for 48 consecutive years. Yet strong brand heritage doesn’t automatically translate into solid investment outcomes.

When examining Ford shares over the past five years, the numbers initially appear impressive: a 85% total return through December 9. The recovery narrative is significant here—shares had collapsed during COVID-19, and the rebound from depressed levels naturally inflated returns. Adding to this picture, management maintains a quarterly dividend payment of $0.15 per share, creating a meaningful 4.56% yield that dividend-seeking investors find appealing.

However, context matters. The S&P 500 (SNPINDEX: ^GSPC) generated 100% in total returns over the same period, a more formidable comparison. When investors expand their time horizon to a decade, the gap widens dramatically. Ford’s 10-year total return of 65% pales against the S&P 500’s 298%—a crushing divergence that reveals the stock’s actual performance relative to the broader market.

Interestingly, Ford has staged a recent comeback, outperforming the index over the past 12 months, driven by solid Q3 earnings that exceeded Wall Street expectations on both revenue and bottom-line metrics.

Does Ford Qualify as a Quality Business?

Periodic market outperformance can mislead investors into believing they own a genuinely superior company. The uncomfortable reality is different.

Ford’s fundamental growth trajectory demonstrates this weakness. Between 2014 and 2024, automotive revenue grew at just 2.4% annually—barely sufficient to keep pace with general economic expansion. This anemic growth reveals an industry facing structural constraints.

Profitability tells an even grimmer story. Over the past five years, Ford’s operating margin has averaged merely 2.5%. The company remains trapped in a brutally competitive market where pricing power is limited. Material costs, labor expenses, and capital-intensive manufacturing operations create a profitability ceiling that cost-cutting alone cannot overcome.

Beyond these structural challenges lies demand cyclicality. Automobiles represent significant household expenditures, and purchasing decisions shift dramatically during economic downturns. When consumers postpone vehicle purchases during recessions, Ford’s already-thin margins deteriorate further, amplifying the business’s vulnerability to economic cycles.

The Investment Outlook Forward

Projecting across the next decade, the evidence suggests Ford will continue underperforming the broader market. An investor targeting long-term wealth building should think carefully about whether Ford deserves portfolio allocation when higher-quality alternatives exist.

For context on what “higher-quality” looks like, consider this: when Netflix appeared on quality stock lists in December 2004, a $1,000 investment would have grown to $507,421 by 2025. Similarly, Nvidia recommendations from April 2005 turned $1,000 into $1,109,138 over the same period. The Stock Advisor approach of identifying superior businesses has delivered an average return of 972%, crushing the S&P 500’s 195% performance.

The takeaway: Ford’s combination of weak growth, thin margins, cyclical demand, and mediocre long-term returns suggests the stock belongs outside most serious investors’ portfolios. The dividend yield may provide near-term income appeal, but it doesn’t compensate for the underlying business weakness that virtually guarantees underperformance versus the market over extended periods.

*Stock Advisor returns as of December 8, 2025