With a dividend yield of 5.2%, Ford (F) has one of the highest dividend yields among S&P 500 Index ($SPX) constituents. However, the company hasn’t increased its regular dividends since 2022. In this article, we’ll look at whether Ford will increase its dividend or rather cut it amid the hit from President Donald Trump’s tariffs.

To begin with, let’s look at the recent history of Ford’s dividend. Ford announced a dividend of $0.15 per share in January 2020, which was suspended as quickly as March of that year, amid the COVID-19 pandemic.

However, Ford’s dividend was restored in October 2021, with a quarterly payout of $0.10 per share. The company increased its payout by 50% and announced a quarterly dividend of $0.15 in July 2022 as its earnings and cash flows rebounded. The company has since maintained the same quarterly dividend.

Ford intends to return between 40% and 50% of its free cash flows to shareholders, and the company has been paying special dividends to help reach its distribution targets. 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, which it attributed to the return on its investment in electric vehicle startup Rivian (RIVN).

Since Ford’s dividends are dependent on its free cash flows, it would be prudent to look at that metric. Ford generated adjusted free cash flows of $6.7 billion last year, while the corresponding numbers in 2023 and 2022 were $6.8 billion and $9.1 billion, respectively. The spike in 2022 free cash flow was on account of the Rivian stake sale.

Ford’s adjusted cash flows were similar in the previous two years, which explains the stagnant regular dividend. For 2025, Ford has forecast free cash flows between $3.5 billion and $4.5 billion. The guidance assumes a net hit of $2 billion from Trump’s tariffs. Detroit rival General Motors (GM) expects a gross tariff impact of between $4 billion and $5 billion but is hopeful of mitigating 30% through cost cuts, adjustments to manufacturing, and pricing actions.

Here, it is worth noting that the tariff situation has been quite fluid. Moreover, other factors like the macro situation, including interest rate changes, will have influence on Ford’s guidance.