Around the Block With Ford

When a stock’s price falls, its dividend yield rises — and Ford Motor Company’s (NYSE: F) yield was recently pushed up near 7 percent. With its price-to-earnings (P/E) ratio in the single digits, too, that makes it an interesting opportunity.

The stock is down, in part, due to the slowing of the North American light-vehicle market and sharp sales declines in China and Europe. A possible trade war could make production more expensive at any given moment, too. Meanwhile, though revenue has been rising in recent years, profit margin hasn’t kept pace.

Ford is working on improving manufacturing efficiency and focusing on higher-margin products. It plans to introduce more than 50 new products in China by 2025, including eight all-new SUVs, which should boost sales. In Europe, it plans to make product cuts, is considering exiting Russia operations and will revamp its vehicle lineup to reduce costs. Its new products are being designed to maximize profitability, with many shared parts under the skin, and streamlined options lists intended to simplify manufacturing.

Investors with an appetite for risk and a long-term horizon who buy into Detroit’s second-largest automaker should enjoy solid returns if it can turn its business around. And while they wait, they’ll receive fat dividends. (The Motley Fool has recommended Ford.)