In what is often seen as a sign of confidence and a way to entice investor loyalty, General Motors is reinstating its dividend.
It is also going to restart stock buybacks as GM continues its major investment in its transition to electric vehicles and self-driving technology.
The automaker said Friday its Board of Directors has authorized the reinstatement of a quarterly cash dividend on GM’s stock at a rate of 9 cents per share.
The first dividend will be paid on Sept. 15 to shareholders of record as of the close of business on Aug. 31. GM suspended its dividend in the second quarter of 2020 because of the COVID-19 pandemic. At that time the rate was 38 cents per share.
GM also announced Friday that it will resume “opportunistic” stock buybacks. A stock buyback, also called a share repurchase, is when a company buys back its shares from the market.
“What we’re saying is the business is performing so well, we’re able to fund all these initiatives for growth,” said GM spokesman Jim Cain. “And, our excess cash flow is so strong that we can share some of it directly with shareholders.”
GM’s Board of Directors increased the capacity in GM’s existing repurchase program to $5 billion of stock, up from the $3.3 billion previously remaining in the program.
“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,” CEO Mary Barra said in a statement. “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.”
Wall Street liked the news and by midmorning Friday, GM’s stock rose 2.03% to $39.50 a share.
Last month, Ford Motor Co. said it would pay a third quarter regular dividend of 15 cents per share on outstanding stock.
Earlier this year, GM said it would invest $7 billion in four Michigan factories — including a new battery cell plant in Lansing — that will create 4,000 new jobs and retain 1,000 jobs.
GM plans to bring 30 new EVs to market by 2025. To date, it has launched the 2022 GMC Hummer EV pickup and the Cadillac Lyriq SUV. Soon, it will bring the Hummer SUV to market. GM has also announced electric versions of the Chevrolet Silverado, Equinox and Blazer, the GMC Sierra pickup, as well as a Buick SUV based off of the Wildcat concept car.
Ultium Cells — GM’s joint venture with LG Energy Solution, in Warren, Ohio, near Lordstown — is ready to start production of EV battery cells this month. GM said it has made “significant construction progress” at the Ultium Cells plants in Spring Hill, Tennessee, and Lansing. Those open in 2023 and 2024, respectively.
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GM has had some success with its commercial delivery subsidiary BrightDrop since launching it in 2021. It made the first customer deliveries for the BrightDrop Zevo 600 delivery truck and has commitments for more from FedEx, Walmart, Verizon and Merchants Fleet.
Cruise, GM’s self-driving vehicle subsidiary, launched a fully driverless commercial ride share service in San Francisco in June. Though Cruise currently operates at a loss, GM said it expects the subsidiary to bring in $50 billion in annual revenue by the end of the decade.
GM has also shored up agreements to secure all the battery raw materials GM requires to build 1 million EVs annually in North America by the end of 2025.
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.