General Motors (GM) recently announced a significant increase in its common stock dividend and the initiation of a new $6 billion share repurchase program. The board of GM approved a 25% increase in the common stock dividend, which will take effect with the next planned dividend in April 2025. This move reflects the company’s strong performance and commitment to delivering value to its shareholders.
Mary Barra, the chair and CEO of GM, expressed confidence in the company’s capital allocation strategy, which focuses on reinvesting in profitable growth, maintaining a strong balance sheet, and returning capital to shareholders. She highlighted the success of GM’s diverse portfolio of internal combustion engine (ICE) vehicles and electric vehicles (EVs) in driving business growth and generating strong margins and cash flows.
The new quarterly dividend rate of $0.15 per share represents a $0.03 increase from the previous quarterly dividend. GM’s executive vice-president and CFO, Paul Jacobson, reaffirmed the company’s confidence in its business plan and financial strength, emphasizing the agility to respond to changes in public policy.
In addition to the dividend increase, GM also announced a $6 billion share repurchase program with no expiration date. The program will be executed in compliance with securities laws and may be halted or terminated at the company’s discretion. GM has also initiated a $2 billion accelerated share repurchase (ASR) program to expedite the buyback process, with Barclays and J.P. Morgan handling the execution.
GM’s capital expenditure for 2025 is projected to range between $10 billion and $11 billion, including investments in battery cell manufacturing joint ventures. Research and product development spending are expected to exceed $8 billion, demonstrating GM’s commitment to innovation and growth.
Despite the ASR program, GM still has $4.3 billion in capacity available for additional share repurchases. As of December 31, 2024, the company had fewer than one billion total shares outstanding, with a weighted average of 1.055 billion shares for 2024.
In a related development, GM announced the closure of its Shenyang plant in northeastern China, as part of a broader restructuring in the region. This decision reflects the intense competition GM faces from local manufacturers benefiting from government subsidies in the Chinese market.
Overall, GM’s latest financial moves underscore its commitment to delivering value to shareholders, investing in growth opportunities, and maintaining a strong financial position in a competitive global market.
