General Motors (GM) stock is rising Wednesday after the auto company announced a 25% increase to its quarterly dividend and introduced a new $6 billion share repurchase program.
"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," said CEO Mary Barra in a statement.
Barra said GM is growing "thanks to our broad, deep, and compelling portfolio of ICE vehicles and EVs" and is "investing our capital in a disciplined and consistent way to continue generating strong margins and cash flows."
GM's new quarterly dividend rate is 15 cents per share, up from 12 cents per share. The increase will take effect with the next planned dividend declaration in April.
"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," said Paul Jacobson, executive vice president and CFO.
The CFO explained that the "repurchase authorization our board approved continues a commitment to our capital allocation policy."
The $6 billion repurchase authorization does not have an expiration date. GM also said it entered into an accelerated share repurchase (ASR) program to repurchase $2 billion of the company's common stock. The ASR is expected to conclude in the second quarter.
Stock buybacks are another way for corporations to boost value for shareholders. As Kiplinger contributor Mark Hake explains in his piece on "What Is a Stock Buyback," a company "that buys back its shares will produce a higher stock price because as its shares count falls, it forces the price higher."
Hake goes on to explain "that effect produces more value for shareholders, as they pay no taxes on this unrealized gain (until they sell shares)."
Is General Motors stock a buy, sell or hold?
GM generated a total return of 49.8% in 2024, nearly doubling the S&P 500's 25% gain. It's down more than 12% so far in 2025 compared to the index's 1.4% increase. But Wall Street remains bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the consensus analyst target price for GM stock is $59.96, representing implied upside of over 20% to current levels. And the consensus recommendation is Buy.
Financial services firm Wedbush has an Outperform rating (equivalent to a Buy) and $60 price target on GM stock.
"We had the opportunity to meet with GM at their headquarters in Detroit and came away with an increased confidence that Barra & Co. are very prepared for all scenarios in the tariff saga," Wedbush analyst Daniel Ives said in a February 13 note.
Ives noted that Wall Street's "initial negative knee-jerk reaction to GM's guidance a few weeks ago 'not including the tariff impact' was the wrong move."
According to Ives, "Behind the scenes the GM team is very prepared for all types of scenarios with Canada/Mexico/China tariffs."
