GM, citing ‘consistently strong earnings,’ to reinstate dividend, resume stock buybacks

General Motors Co. is reinstating its quarterly dividend for shareholders after suspending it in April 2020 in response to the coronavirus pandemic, the Detroit automaker said Friday.

A dividend of 9 cents per share of the company’s common stock will be paid out on Sept. 15 to shareholders of record as of the close of business on Aug. 31.

The automaker also said it will resume “opportunistic” stock buybacks. GM’s board of directors increased the capacity under the company’s existing buyback program to $5 billion of common stock. That’s up from the $3.3 billion previously remaining under the program.

A stock buyback is another way for a public company to return money to shareholders, by buying shares of its own stock on the open market. 

“GM is investing more than $35 billion through 2025 to advance our growth plan, including rapidly expanding our electric vehicle portfolio and creating a domestic battery manufacturing infrastructure,” GM CEO and Chair Mary Barra said in a statement Friday. “Progress on these key strategic initiatives has improved our visibility and strengthened confidence in our capacity to fund growth while also returning capital to shareholders.”

GM suspended its quarterly dividend and halted its share buyback program in April 2020 to conserve cash amid the COVID-19 pandemic. 

In February, during the company’s fourth-quarter earnings call, Barra said that “strong earnings and free cash flow even as we invest for growth naturally raises questions about resuming a common stock dividend.”

But GM decided not to reinstate the dividend at that time because the automaker was focused on progressing with its electric and autonomous vehicle investments. GM is investing $35 billion through 2025 on EVs and AVs.