GM Reinstates Quarterly Dividend Suspended Since Start of Covid-19 Pandemic
General Motors Co.
GM 0.83%
said Friday it plans to reinstate its quarterly dividend, after suspending it in April 2020 to preserve cash during the early days of the Covid-19 pandemic.
The Detroit auto maker also said it plans to resume opportunistic share repurchases, saying progress on key initiatives has instilled confidence it can fund growth in electric vehicles and other advancements while returning capital to shareholders.
GM said it expects to pay out its first dividend of 9 cents a share on Sept. 15 and plans to increase its existing repurchase program of common stock to $5 billion, up from the $3.3 billion remaining in the program.
GM shares rose 1.7% in premarket trading Friday, following the news of the dividend reinstatement.
The move marks a shift from GM’s position early this year. In February, Chief Executive
Mary Barra
said the company wouldn’t resume paying out a dividend, to give priority to spending on EVs and other growth plans.
In the spring of 2020, GM and other car makers suspended their quarterly dividend payments, citing uncertainty around the health crisis and looking to preserve cash as they shut down factories to comply with lockdown orders and other Covid-19-related restrictions.
Since then, GM’s profits have rebounded, and it has set aside billions of dollars to expand its lineup of EVs, including hefty investments in battery factories. In all, the company plans to spend $35 billion on electric and autonomous vehicles by 2025.
GM’s share price has fallen about 34% since the start of the year, more than those of rivals
Ford Motor Co.
and
Stellantis
NV.
Ford reinstated its quarterly dividend late last year, after suspending payments early in the pandemic. The Dearborn, Mich., auto maker then said in July that it would raise the dividend payment to 15 cents a share.
When asked by an analyst this month about the dividend, GM finance chief
Paul Jacobson
said the company would analyze how much money it had in its funds after making costly EV investments.
“We’ve obviously been through a lot of turmoil over the last few years,” Mr. Jacobson said. “But as we start to emerge from that and maybe we start to get through into better, more stable economic times, we can have that consistent return.”
GM’s profits have remained healthy in recent quarters, lifted by constrained inventory levels at dealerships and buyers’ paying higher prices for its vehicles. Still, its net income fell 40% in the second quarter of 2022, mostly due to a loss in China and supply-chain troubles that left the company with tens of thousands of unfinished vehicles it couldn’t sell.
Company executives in July said they expect factory output to improve in the second half of the year, and GM maintained its full-year guidance.
GM said it is still taking precautions to guard against weakening economic conditions, including cutting discretionary spending and curtailing hiring. Ms. Barra said in July that a restructuring in 2019 and 2020 cut about $4.5 billion in annual costs, helping prepare GM for any downturn.
Write to Nora Eckert at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
General Motors Co.
GM 0.83%
said Friday it plans to reinstate its quarterly dividend, after suspending it in April 2020 to preserve cash during the early days of the Covid-19 pandemic.
The Detroit auto maker also said it plans to resume opportunistic share repurchases, saying progress on key initiatives has instilled confidence it can fund growth in electric vehicles and other advancements while returning capital to shareholders.
GM said it expects to pay out its first dividend of 9 cents a share on Sept. 15 and plans to increase its existing repurchase program of common stock to $5 billion, up from the $3.3 billion remaining in the program.
GM shares rose 1.7% in premarket trading Friday, following the news of the dividend reinstatement.
The move marks a shift from GM’s position early this year. In February, Chief Executive
Mary Barra
said the company wouldn’t resume paying out a dividend, to give priority to spending on EVs and other growth plans.
In the spring of 2020, GM and other car makers suspended their quarterly dividend payments, citing uncertainty around the health crisis and looking to preserve cash as they shut down factories to comply with lockdown orders and other Covid-19-related restrictions.
Since then, GM’s profits have rebounded, and it has set aside billions of dollars to expand its lineup of EVs, including hefty investments in battery factories. In all, the company plans to spend $35 billion on electric and autonomous vehicles by 2025.
GM’s share price has fallen about 34% since the start of the year, more than those of rivals
Ford Motor Co.
and
Stellantis
NV.
Ford reinstated its quarterly dividend late last year, after suspending payments early in the pandemic. The Dearborn, Mich., auto maker then said in July that it would raise the dividend payment to 15 cents a share.
When asked by an analyst this month about the dividend, GM finance chief
Paul Jacobson
said the company would analyze how much money it had in its funds after making costly EV investments.
“We’ve obviously been through a lot of turmoil over the last few years,” Mr. Jacobson said. “But as we start to emerge from that and maybe we start to get through into better, more stable economic times, we can have that consistent return.”
GM’s profits have remained healthy in recent quarters, lifted by constrained inventory levels at dealerships and buyers’ paying higher prices for its vehicles. Still, its net income fell 40% in the second quarter of 2022, mostly due to a loss in China and supply-chain troubles that left the company with tens of thousands of unfinished vehicles it couldn’t sell.
Company executives in July said they expect factory output to improve in the second half of the year, and GM maintained its full-year guidance.
GM said it is still taking precautions to guard against weakening economic conditions, including cutting discretionary spending and curtailing hiring. Ms. Barra said in July that a restructuring in 2019 and 2020 cut about $4.5 billion in annual costs, helping prepare GM for any downturn.
Write to Nora Eckert at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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