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26 February 2025

General Motors Unveils $6 Billion Buyback Plan And Dividend Raise

The automaker increases dividend by 25% as part of strategy to reward shareholders.

General Motors (GM) recently announced its new $6 billion share repurchase program along with a 25% increase to its quarterly dividend, igniting excitement among shareholders and sending the automaker’s stock soaring by approximately 4.8% during premarket trading on announcement day.

Under this latest initiative, GM plans to buy back $2 billion worth of shares by the first half of 2025 through an accelerated share repurchase (ASR) agreement with Barclays and J.P. Morgan. The rest of the shares will be acquired at the company's discretion, as outlined by GM.

Starting with the next planned dividend payment set for April 2025, GM will boost its quarterly dividend from 12 cents to 15 cents per share, benefiting all shareholders by rewarding them with higher returns. This raise signifies GM’s decision to fortify its relationship with investors amid challenges within the auto industry.

CEO Mary Barra expressed her confidence, stating, "The GM team's execution continues to be strong across all three pillars of our capital allocation strategy, which are to reinvest in the business for profitable growth, maintain a strong investment grade balance sheet, and return capital to our shareholders."

The announcement of the new buyback plan follows GM's successful completion of its previous $10 billion repurchase program, which was finalized shortly after the fourth quarter of 2023. During this period, the company repurchased 87 million shares, managing to decrease its outstanding share count below 1 billion. This ambitious target was part of GM’s broader strategy to reduce its share count, as stated by CFO Paul Jacobson.

Reflecting on GM's operational performance, the company projected net income to range between $11.2 billion and $12.5 billion for 2025. Analysts following GM expect the automotive giant to achieve approximately $11.45 billion. The increase follows the ambitious growth plans of the company, particularly focusing on investing capital toward its electric vehicle (EV) strategies, even as they acknowledge current EV projects are not yet profitable.

GM outlines expectations for automotive free cash flow to range between $11 billion and $13 billion. Their capital spending for the coming year is forecasted at between $10 billion and $11 billion, as the company works on enhancing its product lineup and manufacturing capabilities.

While showcasing its accomplishments, GM aims for balance—striving to return value to its shareholders without compromising the integrity of its financial health. The ASR program is set to conclude by the second quarter of 2025, with share repurchases influenced by the average stock prices throughout the program’s term.

Despite these positives, GM shares have encountered turbulence, losing more than 12% year-to-date due to broader concerns about slowing automotive sales, regulatory uncertainties, and potential policy impacts from tariffs. Analysts have noted these challenges affecting investor sentiment, even amid the automaker’s consistent performance exceeding Wall Street expectations.

The current buyback and increased dividends, totaling more than $16 billion underlying stock buyback initiatives since 2023, represent GM's commitment to shareholder engagement. The board has collectively approved these strategies as part of GM's capital allocation plan, intending to fortify business growth.

CFO Paul Jacobson reiterated confidence, stating, "We feel confident in our business plan, our balance sheet remains strong, and we will be agile if we need to respond to changes in public policy." This outlook presents GM as poised to navigate the next phases of market dynamics effectively.

Despite market volatility, GM shares have recorded positive metrics over the past year, rising around 18%. The stock closed at $46.71 on February 25, 2025, and saw trading reach up to $48.68 after the announcement.

Investors remain optimistic about GM's future as the company melds tradition with innovation, particularly with its deep portfolio spanning internal combustion engine vehicles and its increasing electric vehicle offerings. Given the magnitude of the capital return plans and proactive approaches, General Motors stands committed to rewarding its shareholders as it works to evolve within the rapidly changing automotive sector.