GM Pays First Stock Dividend in Six Years
General Motors is celebrating their new freedom from being owned by the Federal government with several announcements on Tuesday. They will pay their shareholders a cash dividend for their stock for the first time in six years. The company also announced a new global CFO.
The Board of Directors for GM approved a quarterly dividend of $0.30 per share which will be payable on March 28th to all shareholders as of March 18th. The company suspended their stock dividend in July 2008 amidst the housing market collapse and the drastic plunge in auto sales. Gm filed for Chapter 11 bankruptcy in June of 2009 and eliminated stockholders with $49.5 billion in government funding.
Now, however, the company has 15 consecutive quarters of profit, returned to the S&P 500, and earned its investment-grade credit rating.
David Cole, the chairman emeritus of the Center for Automotive Research, said “The next step – because they’ve been financially successful, have debt under control – is to get shareholders into the game, much like Ford did.”
The company has been hinting for a few months that they would reinstate a stock dividend. After this announcement the stock rose by 3% after hours to $41.28.
As of September 30th, GM has around $37.3 billion in automotive liquidity and analysts have been expecting GM to start returning that money to shareholders. Once a company begins to stockpile cash, naturally investors want some of that profit to be shared. This can come as a share buyback, like GM did with the share buyback from the U.S. Government in December 2012 or as a dividend.
The second announcement from Gm was the promotion of Chuck Stevens to global chief financial officer. He replaced Dan Ammann who was promoted to GM President last month. Stevens will report to new CEO Mary Barra.
These decision will be among the last for GM CEO Dan Akerson. Akerson is retiring on Wednesday in order to care for his wife, Karin, in her fight against cancer.