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Ford is one of the best-known automakers in the world. Its F-series pickup trucks have been the bestselling vehicles in their class for 45 years in a row. And the Ford Fiesta, though relatively rare in the United States, is one of the bestselling cars globally.
Ford stock is almost as popular with investors as Ford cars are with drivers. Ford stock is a component of the S&P 100, the large-cap portion of the S&P 500 index. Interested in owning it? Check out our guide on how to buy Ford stock below.
1. Read about Ford’s fundamentals
You may be very familiar with Ford’s cars and trucks, but are you familiar with Ford's management? How about its revenue, net income and dividend?
With a large, diversified company such as Ford, it’s good to know how much revenue comes from each division and how each division impacts Ford’s net income.
If you’re interested in Ford’s dividend, check out its dividend yield (its dividends per share over the last year, divided by its current stock price) and see how it compares to other companies in its industry.
It’s also worth looking at Ford's dividend payout ratio, or its total dividends over the last year divided by its net income over the last year. Dividend investors generally look for stocks with payout ratios below 80%. Companies with higher ratios may have trouble affording their dividends if net income dips.
For more tips, check out our guide on how to research stocks.
2. Think about how Ford stock would fit into your portfolio
Once you’ve done your research on Ford stock, consider whether buying it would make sense in the context of your overall investment goals.
Generally speaking, you should only buy stocks with money you’re willing to invest for five years or more. That way, if the market crashes, you’ll have plenty of time to recoup your losses before cashing out.
Speaking of diversification, consider index funds, mutual funds and exchange-traded funds as alternatives to buying individual stocks. Building a diversified portfolio of individual stocks can mean researching dozens of companies, which can be a substantial time sink.
Funds can give you exposure to hundreds of stocks with a single purchase. It’s a good rule of thumb to invest no more than 10% of your portfolio in individual positions and keep the rest in a mix of low-cost funds.
If you have a long time horizon and a well-diversified portfolio that could benefit from more exposure to a company like Ford, keep reading.
3. Open a brokerage account or enroll in the Ford stock purchase program
You have two choices for where to buy Ford stock:
Buy Ford stock directly via Computershare. Some companies, including Ford, offer direct stock purchase plans which allow you to buy shares without a brokerage account, subject to various fees and investment minimums. Ford’s plan, which is offered through financial services firm Computershare, requires a minimum one-time investment of $500, or a minimum recurring investment of $50 for at least 10 purchases. It also charges a $5 fee for one-time investments, a $1 fee for recurring investments, and a $0.03 fee per share, as well as a 5% commission on dividend reinvestments.
Buy Ford stock in a brokerage account. Brokerage accounts are investment accounts that can be opened easily online. They don’t typically charge fees or require minimum investments, and many don’t charge commissions for buying stocks. For more information, check out our article on how to open a brokerage account.
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4. Decide how much Ford stock to buy and place your order
How many shares should you buy? That largely depends on the size of your portfolio. Some advisors recommend a “5% rule” that says no single investment should make up more than 5% of your portfolio.
If the amount you want to invest isn’t a multiple of Ford’s stock price, don’t worry. Many brokerage accounts allow investors to buy fractional shares.
Once you’ve done your research, determined how Ford would fit into your portfolio, opened a brokerage account or direct purchase account, and decided how much to buy, you’ll be ready to buy Ford stock. The last step is to choose between placing a market order or a limit order.
A market order tells your broker to buy a stock for you as fast as possible, at the market price. That means the price you get may be different from the price you see when you start the order. A limit order, on the other hand, tells your broker to buy a stock for you if it’s trading at or below a specific price. If the stock isn’t available at that price, the order won’t go through.
You can read more about different types of orders in our general guide to how to buy stocks.
Neither the author nor editor held positions in the aforementioned investments at the time of publication.