Ford Motor Company (F -12.25%) is one of the world's largest automakers. The company produced more than 4.2 million vehicles in 2022, giving it a 5% share of the global auto 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 developing new hybrid and fully electric vehicles (EVs). It was the No. 2 EV brand in the U.S. in 2022.
Ford's growing EV sales could eventually drive profit growth for the car company. The EV-powered upside potential makes the iconic automaker a good stock to consider investing in over the long term.
Here's a step-by-step guide on how to buy shares of Ford, followed by some factors to consider before investing in the automotive stock.
How to invest
How to invest in Ford
You can buy shares of Ford in any brokerage account. If you still need to open one, these are some of the best-rated brokers and trading platforms. Here's a step-by-step guide to buying Ford stock using the five-star-rated platform Fidelity.
Fidelity makes it easy to buy stocks. Its website offers a video tutorial and a step-by-step guide. Here's a screenshot of how to place a stock trade with Fidelity:
On this page, fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The ticker symbol (F for Ford).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.
Once you complete the order page, click the "Place Order" button at the bottom and become a Ford shareholder.
Alternative ways to invest
Alternative ways to invest in Ford stock
Instead of buying shares of Ford directly, you can passively invest in the automotive company through a fund holding its shares.
Ford is a large company by market capitalization. It's a widely held stock. Ford is in several stock market indexes, including the S&P 500 Index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Ford stock.
Exchange-Traded Fund (ETF)
According to ETF.com, 213 ETFs held 413.4 million shares of Ford as of mid-2023. The Schwab U.S. Dividend Equity ETF (SCHD -1.88%) owned the most Ford shares among ETFs at 60.6 million. However, it had a relatively small portfolio weighting in the fund at 1.9% of its holdings.
Other ETFs had greater exposure to Ford stock. However, it still had a relatively modest portfolio weighting in those funds (5.4% 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 purchase shares directly to gain exposure to the company's upside potential. They could also consider investing in an electric vehicle ETF if their main reason for buying shares is its EV-powered upside potential.
Related investing topics
Should I invest?
Should I invest in Ford?
Before buying Ford stock, you must determine if its shares are a good investment. Here are some factors to consider before investing in Ford stock:
Profitability
Is Ford profitable?
Ford is a profitable company by some measures. On a GAAP basis, Ford reported a $2 billion net loss in 2022, due to supply chain and other issues. The company also recorded a $7.4 billion loss on its 9.5% interest in electric vehicle maker Rivian Automotive (RIVN -0.99%) and a $2.8 billion loss on its investment in its Argo AI autonomous vehicle business unit.
However, Ford's earnings before interest and taxes (EBIT) were $10.4 billion after adjustments. Meanwhile, the company generated $9.1 billion of adjusted free cash flow.
Revenue
Ford's revenue
As one of the largest automakers in the world, Ford generates lots of revenue. The company reported $158.1 billion of total revenue in 2022, up 16% from the previous year.
Revenue
Valuation
Ford's valuation
Ford trades at a relatively low valuation. In mid-2023, shares of Ford traded at a forward price-to-earnings (PE) ratio of slightly more than eight times. That was dirt cheap compared to the broader market. The S&P 500's forward PE was more than 20 times while the Nasdaq 100 fetched nearly 29 times forward earnings. That makes Ford look like a good value investment.
Does Ford pay a dividend?
Does Ford pay a dividend?
As of mid-2023, Ford paid dividends to its investors. However, the company has a rather spotty track record as a dividend stock. Ford reinstated its dividend towards the end of 2021 after an almost two-year suspension due to the pandemic's impact on its operations. The company also suspended its dividend in 2006 and didn't reinstate a payout until 2012.
In addition to paying its regular dividend, Ford declared a special supplemental dividend in early 2023. Driving that additional payout was its strong free cash flow and the near-complete sale of its stake in Rivian.
Ford stock split history
Ford stock split history
Ford has completed six stock splits in its history:
| Date | Type of stock split |
| July 1994 | 2-for-1 |
| January 1988 | 2-for-1 |
| June 1986 | 3-for-2 |
| December 1983 | 3-for-2 |
| May 1977 | 5-for-4 |
| May 1962 | 2-for-1 |
The bottom line
The bottom line on investing in Ford stock
Ford is an iconic automaker that makes most of its money selling gas-powered vehicles. However, its best days might not be in the rearview mirror. The company has invested heavily to shift its product lineup to more environmentally friendly vehicles. The investment could pay off by helping re-accelerate Ford's profits in the coming years. With the company's shares seemingly trading for a discounted price, Ford stock could wind up being an enriching investment.
FAQs about investing in Ford stock
Can you buy Ford stock directly?
Is it worth it to invest in Ford?
Ford stock can be a good investment, depending on the timeframe. As of mid-2023, Ford's total return has outperformed the S&P 500 over the past one- and three-year periods (44.6% annualized versus 19.1% and 40.6% annualized versus 13.7%).
However, while Ford has delivered roughly market-matching returns over the last five years (11.5% annualized versus 11.8%), it has significantly underperformed over the past decade (3.6% annualized versus 12.4%).
Is Ford a good stock for long term?
Ford has underperformed the market over the long term (3.6% annualized total return over the last 10 years vs. 12.4% for the S&P 500). However, that doesn't mean it will underperform in the future. Ford's heavy investment in EVs could give it the power to produce higher total returns in the coming years. Meanwhile, it trades at a very low valuation relative to the broader market.
Has Ford stock ever split?
Ford has completed six stock splits. Its last stock split was a 2-for-1 split in 1994.
