General Motors (NYSE:GM) saw an increase in pre-market trading after announcing a $6 billion stock buyback approved by its Board of Directors. Additionally, the company raised its dividend by 33% to $0.12 per share in the first quarter.
The company’s management attributes the decision to its strong revenue growth, margins, and free cash flow, as well as the increasing profitability of its traditional automobile and electric vehicle (EV) business. This has allowed General Motors to provide returns to its shareholders.
In November of last year, GM announced an accelerated share repurchase program of $10 billion. With $1.4 billion remaining from a prior repurchase authorization, the company repurchased around $300 million worth of shares in the first quarter. GM plans to use the remaining $1.1 billion from the previous authorization by the end of the second quarter. The new authorization will allow the company to repurchase more shares once the existing authorization is completed.
Overall, GM expects to buy back stock worth $1.4 billion and declare dividends worth $0.3 billion in the first half of the year. This will result in returning a total of $1.7 billion to shareholders in the first half of this year.
Analysts are cautiously optimistic about GM stock, with a Moderate Buy consensus rating based on 12 Buys, three Holds, and one Sell. Year-to-date, GM has seen an increase of over 30%, and the average price target of $56.27 implies an upside potential of 18.3% from current levels.