This has been another dismal year for Ford (F) investors. With a year-to-date loss of almost 18%, the Blue Oval is underperforming the S&P 500 Index ($SPX) by a wide margin and has fallen below the $10 price level. Pretty much the only saving grace for Ford investors has been the company’s generous dividend, which currently yields 6%. 

In this article, we’ll examine Ford’s 2025 forecast and analyze whether the company will continue paying fat dividends next year. 

Ford Stock Forecast

Wall Street analysts have been turning incrementally bearish on Ford. Last week, Jefferies downgraded the stock from a “Hold” to “Underperform” while slashing its target price to $9. The brokerage is concerned about rising inventories, higher warranty costs, and uncertainty over the company’s Europe business.         

To be sure, these are all valid concerns. Ford faces an overhang of excess inventories sitting in dealer lots. Ford’s warranty costs have been a burning issue and the company can no longer brush it aside as a “legacy issue” as some of the recalls have been for recent models. As for Europe, the company’s ambitious plan to go all-electric in the continent backfired, and it announced mass layoffs in November amid falling sales. The automotive industry in Europe is also facing headwinds from tepid consumer spending and pricing pressure.

Ford and has a consensus rating of “Hold” from the 20 analysts covering the stock. A quarter of the analysts rate Ford as a “Sell” while the corresponding number three months ago was 15%.

Can Ford Continue to Pay Dividends in 2025?

Ford expects to generate adjusted free cash flows between $7.5 billion and $8.5 billion in 2024 which is higher than the $6.8 billion it posted last year. Consensus estimates call for free cash flows of around $9 billion in 2025. The Detroit automaker intends to return between 40%-50% of free cash flow to shareholders and has topped up its regular quarterly dividend with a special dividend for two years to reach that threshold. 

Looking at the expected free cash flows and Ford’s focus on dividends, investors can expect the dividend bonanza to continue in 2025.

However, as I noted in a previous article, given the kind of valuations that Ford trades at, the company might be better off repurchasing shares. The buybacks have been among the key reasons General Motors (GM) stock has outperformed not only Ford, but most other leading automakers this year.

Is Ford Stock a Buy for 2025?

Analysts’ pessimism toward Ford is not hard to comprehend. The company continues to battle multiple issues, and while Detroit-rival General Motors was a market darling in 2024 despite the upheaval in the automotive industry, Ford had yet another dismal year. The macroeconomic environment looks mixed for Ford heading into 2025, and there could be some pricing pressure in internal combustion engine (ICE) cars. The EV industry remains challenged as the price war has shown little signs of abating. Any tariffs on imports from Canada and Mexico under Donald Trump would be another headwind for Ford.

Importantly, analysts expect the company’s profits to fall year-over-year next year, likely due to pricing pressure in the ICE segment. While we don’t have an official word from Ford on the 2025 forecast, GM expects its 2025 earnings to be “similar” to this year despite predicting that its EV segment’s operating losses will fall by between $2 billion-$4 billion next year.

Ford is working to cut costs and is targeting profitability on new EV models within the first 12 months of launch. The company has a diversified portfolio and also sells hybrids along with EV and ICE cars. Hybrid demand has been quite good, as the product appeals to buyers who are wary of battery electric cars due to reasons ranging from high initial buying prices to range anxiety.

Overall, it is not all gloom and doom for Ford, especially given the stock trades at just 5.6x its expected earnings over the next 12 months. While the automotive industry might not be among the hottest sectors in 2025, current valuations leave little scope for downside in F stock. As for dividends, Ford will likely continue with the extravaganza in 2025.