Al Root
General Motors found a way to combat tariff and economic fears: return cash to shareholders.
GM shares rose early Wednesday after the company unveiled plans to hand investors billions in more cash.
The automaker hiked its quarterly dividend payout by 25% to 15 cents a share from 12 cents and said its board authorized a new $6 billion share repurchase plan.
"The GM team's execution continues to be strong across all three pillars of our capital allocation strategy, which are to reinvest in the business for profitable growth, maintain a strong investment grade balance sheet, and return capital to our shareholders," said CEO Mary Barra in a news release.
GM stock was up 4.1% in premarket trading at $48.60 a share, while S&P 500 and Dow Jones Industrial Average futures were up 0.5% and 0.3%, respectively.
At the new 60-cent annual dividend rate, GM stock yields about 1.2%. The average dividend yield for a dividend-paying stock in the S&P 500 is about 2.3%. Ford Motor shares yield about 6.4%.
GM, however, has prioritized buybacks over quarterly payouts. With the new $6 billion repurchase authorization, GM eventually will have bought back some $22 billion in stock since the end of 2023 -- significant for a company with a market capitalization of $46 billion.
Coming into Wednesday, GM shares have fallen about 12% this year. Investors are worried about the impact of President Trump's threatened tariffs on Canada and Mexico, which Ford CEO Jim Farley said have the potential to wipe out billions in industry profits.
The new buyback and higher dividend are signs GM believes it can weather any storm.
"We feel confident in our business plan, our balance sheet remains strong, and we will be agile if we need to respond to changes in public policy," said CFO Paul Jacobson in a news release.
Investors appear relieved by GM's confidence.
Write to Al Root at allen.root@dowjones.com
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February 26, 2025 07:02 ET (12:02 GMT)
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