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Investing.com -- General Motors shares jumped more than 6% in early Wednesday trading after the company announced a new $6 billion share repurchase authorization, including a $2 billion accelerated share repurchase (ASR) program, and a dividend increase of $0.03 per share.
The company said its quarterly dividend will rise to $0.15 per share, up from $0.12, beginning with the next planned dividend in April 2025.
"The GM team's execution continues to be strong across all three pillars of our capital allocation strategy," said GM Chair and CEO Mary Barra. "We are growing our business thanks to our broad, deep, and compelling portfolio of ICE vehicles and EVs."
The ASR program will see GM advance $2 billion to executing banks to repurchase and retire its common stock. The final number of shares repurchased will be based on GM’s average daily trading price during the program, which is expected to conclude in Q2 2025.
Outside of the ASR, $4.3 billion remains available for additional opportunistic share repurchases.
"Our balance sheet remains strong, and we will be agile if we need to respond to changes in public policy," said CFO Paul Jacobson.
GM’s capital spending for 2025 is projected at $10 billion - $11 billion, including investments in battery cell manufacturing joint ventures. Research and development spending is expected to exceed $8 billion.
As of December 31, 2024, GM had fewer than 1 billion shares outstanding, down from a 2024 weighted average of 1.055 billion.
"We assume GM was waiting for better trade clarity on new authorization," Barclays analysts said following the news. "Depressed stock multiple provides good opportunity on buybacks."
Meanwhile, UBS said they believe the announcement will be well received and was a catalyst investors were looking for. "We are a little surprised by the timing. We had thought the company would wait until there was a little more policy clarity. The announcement now could be taken as a sign of GM’s confidence in FCF generation," wrote UBS.
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