One of the Best Overlooked Dividend Stocks

After a complete company turnaround that will be discussed in future business classrooms across the U.S., Ford (NYSE: F ) reinstated its dividend, which had been absent for more than five years. At today's level of $0.40 per share annually, that's a yield of roughly 2.8%. That's a favorable number when compared to competitors such as Toyota (NYSE: TM ) , at about 1%, or General Motors (NYSE: GM ) , which doesn't dish out any dividends. I think Ford is an intriguing value play, and potentially one of the best dividend stocks out there right now.

I don't believe it's a matter of if, but when Ford will increase its dividend. If Ford increased it by $0.20 annually, it would bump the yield to about 4%. That's a move that would attract additional demand from income investors and boost Ford's stock price. That hypothetical increase would bring Ford's payout ratio to about 40%, which might be a little higher than investors would like. This is using current net income numbers, and I expect Ford to increase its net income enough within two years to comfortably deliver a $0.20 dividend increase.

Source: Motley Fool

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