General Motors Company GM has increased its quarterly dividend by 20% to 36 cents per share from the second quarter of 2015. The dividend will be paid on Jun 23, 2015 to stockholders on record as of Jun 10.
The increased dividend amounts to a yield of 4% per annum, based on the closing share price of $36.40 as of Apr 13, 2015. The previous dividend of 30 cents per share translated into an annual yield of 3.3%.
The dividend hike is part of General Motors’ comprehensive capital allocation strategy adopted in Mar 2015. Per this strategy, the automaker intends to return its available free cash flow to shareholders while maintaining an investment-grade balance sheet with a cash balance of $20 billion to boost long-term growth.
As part of this plan, General Motors announced an initial share repurchase of $5 billion, expected to be completed before year-end 2016. In addition, in Feb 2015, General Motors announced its intention to increase the quarterly dividend. The dividend payout is expected to be around $5 billion through the end of 2016. These strategies will boost shareholder value.
In Oct 2014, General Motors had announced another strategic plan intended to enhance customer benefit, boost growth and enhance shareholder value. The company expects the plan enforcement to prove accretive to margins by 9–10% on the basis of adjusted earnings before interest and tax by early next decade. The automaker also anticipates 27% of its global sales volume from new or remodeled products in 2015. It expects new vehicles to generate 38% of its global sales volume in 2016 and 47% in 2019.
General Motors currently carries a Zacks Rank #2 (Buy). Better-ranked automobile stocks include Gentherm Incorporated THRM, Allison Transmission Holdings, Inc. ALSN and Modine Manufacturing Company MOD, all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment