Mary Barra, president and CEO of the 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 restoring a quarterly cash dividend to shareholders that was cut during the early days of the coronavirus pandemic to save money, although it will be at a much lower rate than when it was suspended.
The Detroit automaker said Friday that GM’s board of directors has approved a dividend on the company’s outstanding common stock at a rate of 9 cents per share. That’s about 76% less than the 38 cents per share when the dividend was suspended in April 2020.
GM also announced it will resume its opportunistic share buybacks and increase it to $5 billion in common stock, compared to the $3.3 billion previously left under the program. It did not specify a timetable for the buybacks.
Investors have wondered when GM’s quarterly dividend would be reinstated, especially after crosstown rival Ford Motor reinstated a 10-cents-per-share quarterly dividend for its shareholders in October 2021.
GM CEO Mary Barra said earlier this year that the company would “consider all options 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. until 2025.
In a Friday press release, Barra said progress on “key strategic initiatives has improved our visibility and confidence in our ability to fund growth while returning capital to shareholders.”
The company’s board of directors believed that 9 cents was an “appropriate” dividend as the company continues to invest in its transformation plan, according to GM spokesman Jim Cain.
The first dividend, according to the company, will be paid on September 15 to shareholders known at the close of business on August 31.
“GM’s consistently strong earnings, margins and cash flow, our investment-grade balance sheet and the achievement of several key milestones in our growth strategy allow us to invest aggressively to accelerate our all-electric future while supporting the return of excess free cash flow to shareholders, in line with our long-term capital allocation strategy,” GM Chief Financial Officer Paul Jacobson said in a statement.
The moves come as GM continues to deal with supply chain issues, including a shortage of semiconductor chips and declining investor confidence.
The company’s stock is down about 34% this year. It closed Thursday at $38.72 a share. The company’s market cap is $56.2 billion, up from over $90 billion at the start of the year.