General Motors (NYSE:GM)
In a statement released on August 19th, General Motors (NYSE:GM) stated that it would resume paying quarterly dividends to its shareholders. Since the epidemic onset, payments have been halted to conserve resources.
At a rate of 9 cents per share, the dividend was approved for the outstanding ordinary stock of the corporation. It was a 76% cut from the previous dividend payout of 38 cents per share, which was terminated in April 2020. On September 15th, the initial installment is due.
In addition, General Motors (NYSE:GM) said it would resume and raise its opportunistic share repurchases to $5 billion of common stock from the $3.3 billion left under the program. There was no indication of a timeline for these repurchases.
Due to the ongoing pandemic, automakers and dealers in the United States remained partially closed in April 2020, prompting the automaker to defer dividend payout to conserve funds. Consequently, General Motors (NYSE:GM) sales suffered severely. The company’s determination to bounce back and resume dividend payments shows that it has likely weathered the brunt of the catastrophe caused by the pandemic. It also sends a strong message to investors about GM’s ability to finance future expansion.
General Motors (NYSE:GM) attributes its recent success and ability to return to value generation for shareholders to the rise of its electric vehicle and domestic battery production businesses. The company’s $35 billion investment through 2025 in these crucial sectors has paid off handsomely and increased its profile and power.
General Motors (NYSE:GM) stock was up as much as 4 percent on Friday morning. However, despite a 5% increase in the industry, this stock has been down 17.6% over the past year.
Ford Motor Co. (NYSE:F), a competitor of General Motors (NYSE:GM), also suspended dividend payments in early 2020 due to the pandemic but resumed them in October 2021 at 10 cents per share. There is currently a $2.4 billion annual outlay for Ford’s dividend of 15 cents per share, with a yield of about 4%. General Motors has decided to take a more conservative approach by paying a dividend of 9 cents per share, with an annual dividend spending of $500 million. This yields a dividend on the stock of little under 1%.
Featured Image: Megapixl @Bradcalkins
Author Shariq Khan 
