General Motors has announced its plans to reinstate quarterly dividend payments after previously suspending them in response to the impact on sales and production caused by the global Coronavirus pandemic. The health crisis impacted sales and production, forcing many companies to conserve cash in an effort to stay afloat.
The first dividend, at the rate of 9¢ per share on the company’s common stock, will be paid on September 15.
GM Chief Executive Mary Barra said the company’s electric vehicle (EV) expansion and domestic battery manufacturing infrastructure plans have helped bolster the company’s confidence, saying “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 also said it would resume share repurchases, adding that the board has increased the capacity under the company’s existing repurchase program to $5 billion of common stock, an increase from the $3.3 billion previously remaining under the program.
GM boosted its spending plans on electric and autonomous vehicles last year in an effort to keep pace with Tesla. The company plans to spend $35 billion through 2025 on its EV initiatives.
Ford Motor Company has also said it would restore its dividend to the pre-pandemic rate of 15¢ a share. GM stocks are down 33% in 2022, despite the company’s optimistic outlook expressed to shareholders last month.
GM told investors last month that disruptions to production caused by the shortage of semiconductors that have impacted automakers globally were easing and said the company maintains an optimistic profit outlook. This comes despite GM shares dropping 33% this year already.
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