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General Motors (GM) has announced a significant increase in its quarterly dividend, effective April 2025. This decision comes as President Donald Trump’s proposed tariffs on aluminum and steel imports from Canada and Mexico loom, potentially taking effect as early as March 12. Plus, Trump says he anticipates levying an up-to-25% tariff on cars and auto parts as soon as April.
As a result, the automotive sector is bracing for potential disruptions to supply chains and reduced earnings. General Motors has extensive North American operations, raising the stakes. Its Mexican production, largely destined for the U.S., could be disrupted. Models like the Chevrolet Silverado and GMC pickup trucks might see price hikes under the new tariffs.
Considering these developments and GM’s recent dividend increase, the question remains whether GM stock is a buy, sell, or hold opportunity. Let's examine GM stock and see what it has to offer.
GM Revs Its Financial Engine in 2025
General Motors (GM) is taking significant steps to boost shareholder returns in 2025. The company recently announced a 25% increase in its quarterly dividend, raising it from $0.12 per share to $0.15 per share.
This change will take effect with the next planned dividend in April 2025, bringing GM’s annual dividend to $0.60 per share. At current prices, this yields about 1%. This move signals management’s confidence in GM’s financial health despite macroeconomic challenges.
GM is also launching a $6 billion share buyback program, with plans to repurchase $2 billion worth of shares in the first half of the year. This strategy follows a mixed financial performance in 2024. General Motors shares are down roughly 8% in the year to date but up 21% over the past 52 weeks.
General Motors has a forward price-earnings (P/E) ratio of 4.16x, much lower than the industry average of 15.98x. With a market cap of $48.9 billion, GM seems undervalued compared to its peers, potentially offering a good entry point for investors willing to ride out some short-term ups and downs.
In 2024, GM reported net income attributable to shareholders of $6 billion and adjusted EBIT of $14.9 billion. Adjusted earnings per share of of $1.92 beat expectations of $1.75. This marked 54.8% year-over-year growth from $1.24 in the same quarter the previous year.
However, GM’s fourth-quarter net income took a hit due to over $5 billion in special charges, including restructuring costs and impairments related to its China joint ventures and the decision to cease funding the Cruise robotaxi business.
Despite these challenges, GM’s full-year 2024 adjusted EPS grew 38% to $10.60 from $7.68 the previous year. This growth, combined with the dividend hike and share buyback program, suggests GM is positioning itself for a strong future.
General Motor’s Growth Roadmap
General Motor’s growth plans are moving forward, including through a deal with Norway’s Vianode for synthetic anode materials, which are key for electric vehicle batteries. This partnership helps GM build up its North American battery supply chain, cutting down on imports and supporting production of up to 3 million EVs each year by 2030. This shows GM’s serious about leading in battery technology and creating a reliable supply chain.
Another strategic move is the company’s decision to stop funding Cruise. Instead of focusing on its robotaxi arm, it will prioritize installing advanced self-driving technology in personal cars.
While working on new technology, GM is also preparing for possible trade problems. With Trump’s tariffs on Canadian and Mexican imports fast approaching, the company has created a detailed plan to handle these challenges.
GM has already cut its international inventory by more than 30% and is looking at ways to move production closer to U.S. markets. CFO Paul Jacobson stressed that the company is being proactive, saying tariffs are “just another obstacle” that GM is ready to deal with.
What Does Wall Street Expect for GM Stock?
GM has set ambitious goals for 2025, expecting adjusted earnings per share between $11 and $12 and adjusted earnings before interest and taxes between $13.7 billion and $15.7 billion. These numbers show GM’s confidence in its growth plans, particularly with electric vehicles. The company expects to sell 300,000 EVs in 2025, up 59% from 189,000 in 2024. This push into electric cars should boost profits by $2 billion to $4 billion through better efficiency and cost cutting.
Most Wall Street analysts are positive about GM. Of 23 analysts surveyed, the overall rating is a “Moderate Buy,” with an average price target of $57.91. This suggests the stock could rise 18% from its current price.
Conclusion
So, is GM stock a buy, sell, or hold? Given the company’s ambitious EV plans, strong financial guidance, and the recent 25% dividend hike, it’s looking like a cautious buy. Wall Street’s optimism and the potential 18% upside make GM an attractive option for investors willing to ride out some short-term turbulence.
Keep an eye on upcoming earnings and EV production numbers. If GM delivers on its promises, this stock could shift into high gear.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
