Understanding the Dividend Dynamics of General Motors Co
General Motors Co (GM, Financial) recently announced a dividend of $0.09 per share, payable on 2023-12-14, with the ex-dividend date set for 2023-11-30. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into General Motors Co's dividend performance and assess its sustainability.
What Does General Motors Co Do?
General Motors Co emerged from the bankruptcy of General Motors Corp. (old GM) in July 2009. GM has eight brands and operates under four segments: GM North America, GM International, Cruise, and GM Financial. The United States now has four brands instead of eight under old GM. The company regained its U.S. market share leader crown in 2022, after losing it to Toyota due to the chip shortage in 2021, with share up 170 basis points to 16.4%, a full percentage point ahead of Toyota. GM's Cruise autonomous vehicle arm is providing driverless geofenced AV robotaxi services in San Francisco and other cities and has an exclusive deal with Dubai to do the same. GM owns over 80% of Cruise. GM Financial became the company's captive finance arm in October 2010 via the purchase of AmeriCredit.
A Glimpse at General Motors Co's Dividend History
General Motors Co has maintained a consistent dividend payment record since 2022. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down General Motors Co's Dividend Yield and Growth
As of today, General Motors Co currently has a 12-month trailing dividend yield of 1.24% and a 12-month forward dividend yield of 1.24%. This suggests an expectation of the same dividend payments over the next 12 months. Over the past three years, General Motors Co's annual dividend growth rate was -50.90%. Based on General Motors Co's dividend yield and five-year growth rate, the 5-year yield on cost of General Motors Co stock as of today is approximately 1.24%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, General Motors Co's dividend payout ratio is 0.05. General Motors Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks General Motors Co's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. General Motors Co's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and General Motors Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. General Motors Co's revenue has increased by approximately 4.20% per year on average, a rate that underperforms approximately 56.56% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, General Motors Co's earnings increased by approximately 16.30% per year on average, a rate that underperforms approximately 40.29% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 2.70%, which underperforms approximately 50.39% of global competitors.
Next Steps
When considering the future prospects of General Motors Co, it is essential to weigh the recent dividend announcement against the backdrop of the company's historical dividend performance, current payout ratio, profitability, and growth metrics. While the dividend growth rate has seen a decline, the company's strong profitability and solid growth prospects suggest potential for future dividend stability and growth. Investors should continue to monitor these indicators to make informed decisions. For those interested in expanding their portfolio with dividend-paying stocks, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
