GM’s Board Approves $2.5-Billion Buyback
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General Motors Corp. on Monday approved a $2.5-billion share-repurchase program and increased the dividend on its most widely held stock by 25%, but the moves disappointed some investors who were expecting more.
GM raised the quarterly common stock dividend to 50 cents a share from 40 cents. The auto maker said it will buy back about 5% of its shares outstanding in the next 12 months and will consider buying more.
The moves had been expected because of GM’s expanding cash reserve. Some investors and analysts had hoped the dividend would rise to 60 cents and that GM would buy back $3 billion in stock.
“People wanted a more aggressive first step,” said Nicholas Colas, an analyst at Credit Suisse First Boston.
GM shares fell 62.5 cents to close at $61.875 in New York Stock Exchange trading.
The increase puts GM’s dividend yield at 3.2%, trailing Chrysler Corp.’s yield of 4.6% and Ford Motor Co.’s 4.7%. All are well above the average of about 2% for the Dow Jones industrial average’s 30 blue-chip stocks.
GM said its cash balance grew to $17 billion at the end of the fourth quarter, up from $10 billion in 1995.
Separately, GM said it hasn’t scheduled negotiations with union officials to resolve a strike at a plant in Moraine, Ohio, that makes sport-utility vehicles.
The 4,300 members of the International Union of Electronic and Electrical workers began picketing Sunday, after voting down a tentative local contract.