Ford's one-time dividend sends wrong message.

A short-term gain at the expense of confidence in the future hurt stockholders.

Ford's windfall dividend was not a wise choice.

It's hard to imagine what Ford (NYSE:F) executives were thinking when they decided on a one-time windfall dividend of $0.25 a share in lieu of increasing the existing dividend rate. Surely, they had to think about the market reaction when they told the world that Ford did not have confidence in its future. That is the message that was sent, the market heard it loud and clear and reacted dramatically. The stock dove on the news and, as of early Friday afternoon, has recovered a bit at $11.79, down 3.3% on the day. The initial drop represented about a 30% punishment for an exceedingly unwise decision. And remember, when we say a stock is punished, it really is the stockholder that pays the price and is the one who, in reality, who is punished.

Yes, it is good to receive a forty-cent dividend and, when factored in with the remaining quarterly dividends, it raises the annual dividend to eighty-five cents a share. This gives current stockholders a very decent return. However, if you bought in earlier, you had better kiss the stock and learn to love it because it appears that the share price isn't going anywhere anytime soon.

When looking at the future, Ford is coming off a year of record-setting sales, and virtually has the light truck business in its hip pocket with the new F-150. It is doing well in India and China and dramatically improving its market share in Europe (up 24%), a windfall that has been helped along by VW's (OTCPK:VLKAY) stunning stupidity. In addition, 2016 is predicted to be as good a sales year as 2015; maybe even better. What did the Board of Directors see?

With these very basic observations in mind, consider some obvious alternatives available to the Board. Ford has 3.9 B shares outstanding, generally twice the number of shares outstanding for GM (NYSE:GM), Toyota (NYSE:TM), or Honda (NYSE:HMC). Why didn't they take some of the outstanding shares off the board? This would have been a benefit to existing stockholders because the EPS would have gone up with the decreased number of shares outstanding and sent a message to the market that Ford has confidence in the future.

Or, why not half-way measures? Increase dividends AND buy back shares and have the best of both worlds; this action would both signal confidence in the future as well as enhancing stock value.

We could beat this dead horse all that we want, but the end result would be the same: Ford did not choose wisely and we stockholders are paying the price. Perhaps the Board did not anticipate the reaction to a policy of not permanently increasing dividends that signaled a lack of confidence in the company's future and the logical outcome of that decision. But, that is what Ford's executive management group is paid to do, and they did not choose wisely.