Mary Barra, president and CEO of General Motors Company (GM), speaks at the Milken Institute Global Conference in Beverly Hills, California on May 2, 2022.
Patrick T. Fallon | AFP | Getty Images
DETROIT — General Motors is reinstating a quarterly cash dividend for shareholders that was reduced to preserve funds during the early days of the coronavirus pandemic, although it is at a much lower rate than when it was suspended.
The Detroit automaker said Friday that GM’s board of directors had authorized a dividend on the company’s outstanding common stock at a rate of 9 cents per share. That’s a roughly 76% reduction from 38 cents per share when the dividend was suspended in April 2020.
GM also announced that it will resume and increase its opportunistic stock buybacks to $5 billion in common stock from $3.3 billion previously under the program. He did not specify a time frame for redemptions.
Investors have wondered when GM’s quarterly dividend will be reinstated, particularly after Crosstown rival Ford Motor reinstated a quarterly dividend of 10 cents per share for its shareholders in October 2021.
Earlier this year, GM CEO Mary Barra said the company would “consider all opportunities to return excess capital to shareholders” but the priority was to accelerate its transformation plans which include investing $35 billion in electric and autonomous vehicles through 2025.
In a statement on Friday, Barra said progress on “key strategic initiatives has improved our visibility and reinforced confidence in our ability to fund growth while returning capital to shareholders.”
The company’s board of directors deemed 9 cents an “appropriate” dividend as the company continues to invest in its transformation plan, according to GM spokesman Jim Cain.
The first dividend will be paid on September 15 to shareholders of record at the close of business on August 31, according to the company.
“GM’s continued strong earnings, margins and cash flow, our superior balance sheet and the achievement of several important milestones in our growth strategy allow us to invest aggressively to accelerate our all-electric future while supporting returning excess free cash to shareholders, consistent with our long-term capital allocation strategy,” GM Chief Financial Officer Paul Jacobson said in a statement.
The shares come as GM continues to grapple with supply chain issues, including a shortage of semiconductor chips and a loss of investor confidence.
Shares of the company are down about 34% this year. It closed Thursday at $38.72 per share. The company’s market capitalization is $56.2 billion, up from more than $90 billion at the start of the year.