General Motors Stock Surges on Dividend Hike and Share Repurchase

General Motors (GM) stock is gaining today, up 7% to $49.98 at last check Wednesday, following the company's announcement of a 25% increase in its quarterly dividend and a new $6 billion share repurchase program. These capital allocation decisions, along with the company's strong financial performance and positive outlook, have contributed to the stock's rise.

The dividend boost, which raises the quarterly payout from 12 cents to 15 cents per share, will take effect with the company’s next planned dividend, expected to be declared in April 2025. Additionally, General Motors has entered into an accelerated share repurchase (ASR) program, committing $2 billion of the repurchase authorization. The ASR program is expected to conclude by the second quarter of 2025.

Mary Barra, General Motors’ chair and CEO, emphasized the company’s continued strong execution across its diverse portfolio of internal combustion engine vehicles and electric vehicles. "At the same time, we are investing our capital in a disciplined and consistent way to continue generating strong margins and cash flows," Barra added.

General Motors' capital spending in 2025 is expected to range from $10 billion to $11 billion, including investments in battery cell manufacturing joint ventures and over $8 billion in research and product development. The company also plans to spend over $8 billion on research and product development.

In addition to the ASR program, General Motors has $4.3 billion remaining under its share repurchase authorization for further opportunistic buybacks. The company is confident in its financial position and remains agile to respond to changes in public policy.

According to Benzinga Pro, GM stock has gained over 17% in the past year. Investors can gain exposure to the stock via First Trust Nasdaq Transportation ETF FTXR.

Wall Street remains bullish on General Motors stock, with the consensus analyst target price for GM stock being $59.96, representing implied upside of over 20% to current levels. Financial services firm Wedbush has an Outperform rating (equivalent to a Buy) and $60 price target on GM stock.

In conclusion, General Motors' stock price increase today can be attributed to its dividend increase, share repurchase program, strong financial performance, and positive outlook. These factors align with the company's long-term strategy of profitable growth, maintaining a strong balance sheet, and returning value to shareholders.