GENERAL Motors authorised a new US$6 billion share buyback plan and raised its dividend as improving profitability in its electric vehicle operations allow the automaker to return cash to investors.
The company plans to “opportunistically” buy its stock under the new programme after completing a US$10 billion accelerated share repurchase approved last November, according to a statement on Tuesday (Jun 11).
GM expects to exhaust the remaining US$1.1 billion of the prior plan by the end of this quarter.
“We’re growing and improving the profitability of our EV business and deploying our capital efficiently,” while also seeing improvement in the gas-power vehicle business, the company said. “This allows us to continue returning cash to shareholders.”
The decision builds on the momentum GM saw coming out of the first quarter, when strength in domestic truck and SUV sales helped it overcome challenges in China and raise its full-year profit forecast. Despite early stumbles with its EV strategy, the company has said it’s committed to the market, which continues to grow.
GM’s shares turned positive on the announcement, rising 1.1 per cent as of 7.58 am before regular trading in New York. The stock gained 32 per cent this year through Monday’s close.
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Alongside the buyback, the company also raised its quarterly dividend 33 per cent to 12 cents a share.
GM is not alone – 42 other S&P 500 Index companies have announced buybacks this quarter, according to Gina Martin Adams, Bloomberg Intelligence’s chief equity strategist.
Prior to GM’s announcement, BI found that S&P firms had increased buybacks by 5 per cent from the same period a year ago to US$210 billion. It was the second quarter of growth after five consecutive quarterly declines. BLOOMBERG
