DETROIT — General Motors Co said on Wednesday it will return more cash to shareholders by raising its stock buyback program by 80 per cent to US$9 billion and increasing its dividend, sending shares up 4.6 per cent in premarket trading.
GM also raised its 2016 earnings per share forecast to US$5.25 and US$5.75 per share from a previous 2016 outlook made in October of between US$5.00 and US$5.50 per share.
GM executives outlined a plan to give back to shareholders a total of US$16 billion for the period from 2015 through 2017. In March 2015, GM agreed to return a total of US$10 billion in share repurchases and increased dividends through the end of 2016.
Investors appeared to cheer GM’s plans in premarket trading, boosting shares by 4.6 per cent to US$31.70 per share in the minutes after the company’s announcement.
By contrast, investors sold Ford Motor Co stock Tuesday evening after the Dearborn, Michigan, automaker said it would pay a special dividend of US$1 billion, but cautioned that margins in its North American auto market could hit a plateau at about 9.5 per cent.
Ford shares were down about 1 per cent in premarket trading, at US$12.71.
Taken together, the back-to-back presentations by the two automakers at a conference on the sidelines of the Detroit auto show set up a referendum for investors on which of the two U.S. automakers has the better strategy to weather a cyclical downshift in vehicle sales growth, increasing costs to meet regulatory demands and technology-driven challenges from self-driving vehicles and car sharing.