How to Invest in Ford Stock

Ford Motor Company (f 2.52%) is one of the largest car manufacturers in the world. The company produced more than 4.2 million vehicles in 2022, giving it a 5% share of the global automotive market. The automaker also has a lucrative financing arm, Ford Credit.

Although gas-powered vehicles are a big driver of Ford’s sales, the company has invested heavily in the development of new hybrid and all-electric vehicles (EVs). It was the #2 EV brand in the US in 2022.

Ford’s growing sales of electric vehicles could eventually drive earnings growth for the auto company, making the legendary automaker a good stock to invest in for the long term.

Here’s a step-by-step guide to buying Ford stock, followed by some factors to consider before investing in auto stocks.

How to invest in Ford

You can buy Ford shares in any brokerage account. If you have yet to open one, these are some of the top rated brokers and trading platforms. Here’s a step-by-step guide to buying Ford stock through the five-star TD Ameritrade platform.

TD Ameritrade makes it easy to buy stocks. It offers a few options to place a trade. The first way is by clicking on the “Trade” tab at the top of the page:

From there, click on the “Stocks & ETFs” link. This will bring you to the following page:

Fill out all relevant information on this page, including the number of shares you wish to buy, the ticker symbol (F for Ford) and whether you wish to place a limit order or a market order. The Motley Fool recommends using a market order because it guarantees that you’ll buy stock at the market price immediately.

After completing the order page, click on the “Review Order” button at the bottom of the page. Review your trade and carefully ensure you have selected the correct ticker symbol (F for Ford) and the number of shares you wish to buy. When you’re done, click submit and become a Ford shareholder.

Another way to place a trade with TD Ameritrade is through the “SnapTicket” box at the bottom of any screen. Clicking on it will take you to the following box:

Fill out all order information and click on the “Review Order” button. Review your trade and submit.

Alternative ways to invest in Ford stocks

Instead of buying shares in Ford outright, you can passively invest in the auto company through a fund that holds its stock.

Ford is a large company in terms of market capitalization. It’s a common stock. Ford is included in several stock market indexes, including the S&P 500 Index. As a result, index funds and exchange-traded funds (ETFs) that compare their returns to those indices hold Ford stock.

According to ETF.com, as of early 2023, 219 ETFs held 314.8 billion Ford shares SPDR S&P 500 ETF Trust (SPY 1.41%) owned the most shares of Ford among ETFs at 42.3 million. However, he had a relatively small portfolio weight in the fund at 1.4% of his holdings.

Other ETFs had greater exposure to Ford stocks. However, it still had a relatively modest portfolio weight in these funds (4.4% 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 buy shares outright to take advantage of the company’s upside potential.

Should I invest in Ford?

Before you buy Ford stock, you need to determine if the stock is a good investment. Here are some factors to consider before investing in Ford stock:

Is Ford profitable?

Ford is a profitable company in some ways. On a GAAP basis, Ford reported a net loss of $2 billion in 2022 due to supply chain and other issues. The company also posted a $7.4 billion loss on its 9.5 percent stake in the electric vehicle maker Rivian Automotive (RIVN 7.5%) and a $2.8 billion loss from its investment in its Argo AI autonomous vehicle division. However, Ford’s earnings before interest and taxes (EBIT) after adjustments were $10.4 billion. Meanwhile, the company generated adjusted free cash flow of $9.1 billion.

Ford’s sales

As one of the largest automakers in the world, Ford generates a lot of revenue. The company reported total revenue of $158.1 billion in 2022, up 16% year over year.

Ford’s rating

Ford is trading at a relatively low valuation:

The S&P 500 was trading at 17.3 times price-to-earnings and about 20 times free cash flow in March, making Ford — which trades at about 7 times price-to-earnings — like good value investment.

Does Ford pay a dividend?

Starting in early 2023, Ford began paying dividends to its investors. However, the company has a patchy track record as a dividend stock. Ford reinstated its dividend toward the end of 2021 after a nearly two-year suspension due to the impact of the pandemic on its operations. The company also suspended its dividend in 2006, only returning a payout in 2012.

In addition to paying the regular dividend, Ford announced a special dividend in early 2023. This additional payout was driven by strong free cash flow and the nearly complete sale of its stake in Rivian.

History of the Ford Stock Split

Ford has performed six stock splits in its history:

The conclusion to investing in Ford shares

Ford is a legendary automaker that makes most of its money from selling gas-powered vehicles. However, his best days may not be in the rearview mirror. The company has invested heavily to switch its product range to more environmentally friendly vehicles. The investment could pay off by helping Ford’s earnings accelerate again in the years to come. With the company’s shares appearing to be trading at a discounted price, Ford stock could be an enriching investment.