Top Dividend Stock Offering 5% Yield: Buy or Avoid?
Investors looking for high-yielding dividend stocks often turn to established companies that offer stability and the potential for compounding wealth. Among the notable contenders in the automotive sector are Ford Motor Company and Stellantis. However, an analysis reveals that Ford presents a more favorable option for income investors due to its growth trajectory and financial performance.
Ford Motor Company: A Strong Contender for Dividends
Ford Motor Company (F) operates through three key business segments: Ford Blue, Model-e, and Ford Pro. Each segment has distinct financial outcomes that impact overall profitability. In 2024, Ford Blue reported an earnings before interest and taxes (EBIT) of $5.3 billion with a margin of 5.2%. In contrast, Model-e faced significant losses, reporting a deficit of $5.1 billion.
A standout performer, Ford Pro achieved a remarkable EBIT of $9 billion, with an impressive 13.5% margin. This segment benefits from software and physical services, accounting for 17% of Ford Pro’s EBIT over the trailing 12 months ending in the second quarter of 2025. Additionally, subscriptions for Ford Pro surged by 24%, reaching 757,000.
Attractive Dividend Yield
Ford currently offers a generous dividend yield of 5%. The company frequently provides supplemental dividends based on excess cash flow, making it an attractive option for income-focused investors.
Stellantis: Challenges Ahead
Stellantis (STLA) faces significant hurdles under the leadership of newly appointed CEO Antonia Filosa, who took the helm in June 2025. The company suspended its profit guidance in April due to a steep profit decline and uncertainties concerning tariffs imposed by the Trump administration.
To combat these issues, Stellantis plans to invest $13 billion to increase U.S. production by 50% and launch five new vehicles. This strategy aims to reduce reliance on imports, as Stellantis sold 1.3 million vehicles in the U.S. last year, with approximately 600,000 imported.
Concerns About Profitability
Despite these strategies, Stellantis’s profitability remains a concern. Analysts estimate that the company’s factory capacity utilization in North America and Europe is between 50% and 60%, which is low for the automotive industry. Filosa faces tough decisions regarding the company’s 14 brands and must strengthen relationships with suppliers and dealerships.
Conclusion: Ford vs. Stellantis
While both Ford and Stellantis appear in high-dividend yield screenings, their underlying financial health diverges significantly. Ford’s clear strategies for profitability through its Ford Pro segment and solid dividend yield make it the preferable choice for income investors. In contrast, Stellantis contends with profitability challenges and the complexities of a turnaround. Ultimately, Ford stands out as the dividend stock worth considering.
