General Motors Company
) is planning to reinstate a quarterly cash dividend soon,
according to Daniel Ammann, the chief financial officer (CFO). He
believes that investors are expecting a dividend from the
company, now that it is free from government shareholding and is
generating positive cash flows.
The U.S. Department of Treasury completed the divestment of
its remaining stake in General Motors in Dec 2013. The department
recovered a total of $39 billion out of its bailout loan of $49.5
billion to the automaker following its bankruptcy in 2009. Thus,
the Treasury had to incur a loss of $10.5 billion.
General Motors had stopped paying dividends following the
recession in 2008. It has more or less recovered from the effect
of the recession and bankruptcy and has completed 15 consecutive
quarters of profitable operations. The fourth quarter of 2013,
whose results are scheduled to be announced before the opening
bell on Feb 6, 2014, is expected to be the 16
The cash flows of General Motors have also improved. During
the third quarter of 2013, the company had a net cash flow of
$3.3 billion from automotive operations, up from $3.1 billion in
the year-ago period.
The company now intends to build a strong balance sheet that
can not only provide ample returns to shareholders, but also
endure the impact of any economic weakness.
General Motors' peer,
Ford Motor Co.
), recently increased its dividend for the first quarter of 2014
by 25% to 12.5 cents per share. The new dividend will be paid on
Mar 3, 2014 to holders of the outstanding Class B and common
stock. The record date for the quarterly dividend is Jan 31,
2014. The increase amounts to a dividend yield of 3.2% per annum,
based on the closing share price of $15.84 as of Jan 9, 2014.
General Motors, which carries a Zacks Rank #3 (Hold), is one
of the largest automobile producers in the world along with Ford,
Honda Motor Co., Ltd.
Toyota Motor Corporation
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GENERAL MOTORS (GM): Free Stock Analysis
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