Is Ford a Dividend Stock Worth Buying for 2026 After Its 34% Rise This Year?

2025 is now drawing to a close, and U.S. stocks are set to deliver double-digit returns for the third consecutive year. It was a volatile year for the automotive industry, which battled the steep tariffs that President Donald Trump imposed on imports of cars and auto parts. The electric vehicle (EV) industry also faced a setback after the tax credit was withdrawn.

Looking at the price action, General Motors (GM) is outperforming other auto stocks by a wide margin this year. Ford (F), too, is up 34% for the year, and while the gains are lower than GM, they are better than other auto names like Stellantis (STLA), Honda Motor Company (HMC), and Toyota Motors (TM).

Meanwhile, when it comes to dividends, Ford stands out with its dividend yield of 4.5%, based on a regular quarterly dividend of 15 cents. The actual dividends have been even higher, as Ford has been paying special dividends to help reach its distribution target of between 40% and 50% of annual free cash flows. This year, Ford paid a supplemental dividend of $0.15 to mark the company’s third consecutive special dividend, after dishing out $0.18 last year. Ford paid a special dividend of $0.65 in 2023, after it booked a windfall gain on its investment in electric vehicle startup Rivian (RIVN).

As things stand today, a supplemental dividend for 2026 is something we can rule out. In fact, looking at Ford’s adjusted free cash flow guidance of between $2 billion and $3 billion, it barely has the money to cover the base dividend at the midpoint. Notably, Ford’s 2025 cash flows took a hit from the fire incident at key supplier Novelis. There was also the tariff impact, which is more of a recurring issue rather than a one-off, unless these are waived.

Looking ahead, Ford’s cash flows would be under pressure over the next couple of years at least. The company announced a massive $19.5 billion charge in its EV business earlier this month. Of this, $5.5 billion would be in cash, which the company expects to incur over the next two years, with the majority coming in 2026.

I believe the best-case scenario for Ford investors would be the company maintaining its current payout, even as that might mean it overshoots the payout targets. Companies cut dividends only in dire scenarios, as was the case in 2020 when both Ford and General Motors suspended their dividends altogether.