A comprehensive analysis of GM's dividend history, yield, growth rates, and sustainability
General Motors Co(GM, Financial) recently announced a dividend of $0.09 per share, payable on 2023-09-14, with the ex-dividend date set for 2023-08-31. 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 deep dive into General Motors Co's dividend performance and assess its sustainability.
Understanding General Motors Co
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.
General Motors Co's Dividend History
General Motors Co's dividend history showcases a firm commitment to rewarding shareholders. The company's Dividends Per Share has seen consistent increments over the years, indicating a solid dividend distribution approach.
General Motors Co's Dividend Yield and Growth
Dividend growth rates, both on a 3-year and 5-year basis, further shed light on the company's proclivity to increase shareholder returns. The 3-year dividend growth rate and the 5-year dividend growth rate both reveal a pattern of consistent and robust growth.
General Motors Co's dividend has changed by -50.90% per year on average over the past three years, which underperforms approximately 99.46% of global competitors.
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 1.07% per year.
Is General Motors Co's Dividend Sustainable?
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 2023-06-30, 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 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Additionally, the predictability rank of 1 stars out of 5 suggests that revenue and earnings growth of General Motors Co is not consistent.
General Motors Co's Growth Metrics
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 than approximately 56.09% 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 10.30% per year on average, a rate that underperforms than approximately 49.29% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 63.20%, which underperforms than approximately 2.8% of global competitors.
Conclusion
While General Motors Co's dividend performance shows a commitment to rewarding shareholders, the sustainability of these dividends may be a concern due to the company's inconsistent revenue and earnings growth. However, the company's solid profitability rank and growth rank suggest that it has the potential to overcome these challenges. Investors should monitor these metrics closely to make informed decisions.
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