Dividend Stocks to Buy for Double-Digit Returns: Ford Motor Company (F)
Dividend Yield: 5.2%
If it’s true for General Motors, it has to be true for rival Ford Motor Company (NYSE:F) as well. As was the case with GM, Ford trades at an absurdly cheap valuation. The shares fetch just 7 times forward earnings. And yes, Ford also faces the same challenges. Ride sharing and improved public transportation are long-term threats that will eat into growth.
But it’s a mistake to assume these are linear trends. Yes, millennials have been less eager than prior generations to own a car. A lot of that is due to them being the most indebted generation in history and earning lousy starting starting salaries coming out of college. But as those millennials finally settle in to adult life and put down roots, they will buy cars. As a practical matter, having children changes your life, and carting them around is a lot easier in a car than in a taxi or subway train.
At current prices, Ford sports a dividend yield of 5.3%. Given the cheapness of the stock, 5% annual capital gains seems almost laughably low. Ford should safely produce annual returns well into the double digits for years to come.
Charles Sizemore is the principal of Sizemore Capital, a wealth management firm in Dallas, Texas. As of this writing, he was long EPD, ETE, F, GM, MAIN, O, OHI, PSEC, VER and WPC.