GM Stock Surges on Dividend Hike, $6B Buyback Plan

General Motors (GM) shares surged on Wednesday following the announcement of a 25% increase in its quarterly dividend and a new $6 billion share repurchase program. The automaker's stock jumped 4.2% early in the day, reflecting investor confidence in the company's financial health and commitment to returning capital to shareholders.



GM's board of directors approved a new quarterly common stock dividend rate of $0.15 per share, effective with the company's next planned dividend in April 2025. This increase aligns GM's dividend with that of crosstown rival Ford Motor and signals the company's confidence in its ability to generate cash flow and maintain a strong balance sheet.

In addition to the dividend hike, GM announced a new $6 billion share repurchase program, with $2 billion expected to be completed during the second quarter. The accelerated share repurchase (ASR) program will be executed by Barclays and J.P. Morgan. The total number of shares ultimately repurchased will be based on the average of the daily volume-weighted average prices of GM's common stock during the term of the program.



The new share repurchase program builds on GM's previous buyback initiatives. Since 2023, the automaker has announced $16 billion in stock buyback programs, resulting in the retiring of more than 1 billion outstanding shares. As of the end of last year, GM had fewer than 1 billion shares outstanding, achieving a target announced earlier in the year by GM CFO Paul Jacobson.

GM's capital allocation strategy focuses on reinvesting in the business for profitable growth, maintaining a strong investment-grade balance sheet, and returning capital to shareholders. The increased dividend and share repurchase program demonstrate the company's commitment to this strategy, balancing the needs of the business with the expectations of shareholders.

GM's 2025 financial projections support its capital allocation strategy. The company expects net income attributable to stockholders in a range of $11.2 billion to $12.5 billion, or $11 to $12 per share; adjusted earnings before interest and taxes (EBIT) of $13.7 billion to $15.7 billion, or $11 to $12 adjusted EPS; and adjusted automotive free cash flow of between $11 billion and $13 billion. These projections indicate that GM is generating sufficient cash flow to support its capital allocation strategy, including the increased dividend and share repurchase program.

In conclusion, GM's stock surged on the news of a dividend hike and a new $6 billion share repurchase program, reflecting investor confidence in the company's financial health and commitment to returning capital to shareholders. The increased dividend and share repurchase program align with GM's capital allocation strategy, which focuses on reinvesting in the business, maintaining a strong balance sheet, and returning capital to shareholders. GM's 2025 financial projections support this strategy, indicating that the company is generating sufficient cash flow to execute its capital allocation plan.