This Legacy Carmaker Just Pulled Off the Impossible… Should You Get In?

While Ford’s (-21% over the last year) EV division has Henry rolling over in his grave, General Motors is doing pretty well. Its stock is up 17% over the last year and the C-Suite meeting room just cooked up a meal that will leave shareholders satisfied and smiling.

GM announced this morning that it’s increasing its quarterly dividend by 25%, bumping it up from 12 cents to 15 cents per share. That might not sound like much, but in a market where you have Walgreens suspending their dividend for the first time in 90 years, shareholders should be ecstatic. The increased payout kicks in starting April 2025, so mark your calendars.

If you own GM stock, it’s probably not because you expect Tesla-style price swings… This is an old-school, slow-and-steady kind of investment. So dividend growth is where the real long-term rewards come in.

Oh, and that’s not all. GM also announced a fresh $6 billion share buyback program, with $2 billion set to be repurchased by mid-2025. This follows the $10 billion buyback they just wrapped up in Q4… a move that already reduced their outstanding shares below 1 billion. In simple terms: fewer shares, bigger slice of the pie for each shareholder.

Paul Jacobson, GM’s CFO, summed it up nicely (if I do say so myself): “Moving forward, we expect to continue returning excess capital to our shareholders and further reducing the share count.” (Aka: We’re making too much money, so we’re giving some back).

Unlike Ford, who lost $5.1 billion on their EV segment and is projected to lose up to $5.5 billion this year… GM realized that robotaxis were more of a dream than a viable business, so they pulled the plug on Cruise (their autonomous vehicle division) and doubled down on things people actually want… like Super Cruise driver assistance.

And what do you know… that move is already paying off. Super Cruise has seen strong adoption, with GM expecting $2 billion in annual revenue from it within five years. That’s called playing the long game without setting money on fire… Ford, take notes.

Usually handing out bigger dividends means you don’t see any growth in the future (like Warren Buffett has said many times)… but GM’s projections go against the thinking. The company is projecting $11.2 billion to $12.5 billion in net income for 2025, with capital spending between $10 billion and $11 billion. While they’re still making big EV investments, they’re balancing it with actual profit-making initiatives (a concept Ford seems to have forgotten).

Analysts are catching on. Deutsche Bank’s Edison Yu just upgraded GM to a “Buy”, raising the price target to $60. And the average 12-month price target across 23 analysts is $58.09, implying a 26% upside from the current $46 share price.

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Stock.News has positions in Ford and Tesla.