Analyst says GM may begin paying dividends by 2012

Article by Christian A., on March 10, 2011

General Motors Co. may start paying a dividend as early as 2012 after contributing $5.5 billion or more in cash to its U.S. pension in each of the next two years, according to Brian Johnson, an analyst at Barclays Capital. Johnson wrote in a note that GM should have "exceptionally strong" returns on pension assets that bring the program to full funding.

GM CFO Chris Liddell wants the automaker to diminish its debt and fund pension obligations in order to maintain spending on vehicle development through downturns.

Last year, GM paid down $11 billion of debt and made $6 billion in cash and stock contributions to the U.S. pension, according to Autonews.

Johnson said that it has been made clear that GM wants to bring the pension plan even first before paying a dividend. However, GM spokesman James Cain said that the company won’t comment on individual analysts' research.

However, Cain cited a statement made by GM CEO Dan Akerson on a Feb. 24 conference call that GM will take "meaningful steps" in 2011 to fully fund the U.S. pension plan.

Johnson said that Barclays is assuming 8.5% returns on pension assets this year and through 2013. It means that a dividend is unlikely before 2013. He added that the returns, combined with cash contributions to the pension plan, will enable GM to pay a dividend of 50 cents in 2013 and 75 cents in 2014.

Topics: gm, united states

If you liked the article, share on:

Pin It

Comments

Recommended

Has Toyota started the production of a new electric supercharger? Well, a patent that was recently published indicated that they might have. And this electric supercharger looks more durable and...
by - March 27, 2017
The Tesla Model S has finally arrived in South Korean soil and is now available for test drive. But, there’s a catch. You’ll have to wait several months if you...
by - March 27, 2017
Sorry to say this to the Sport Quattro Concept fanatics. If you guys have been hoping for the production of this iconic concept to begin, prepare for your dreams to...
by - March 27, 2017
South Korean car company SsangYong recently revealed sketches of their upcoming SUV. We’re not always impressed by Korean car designs, but this one looks quite promising. Yup, it is the...
by - March 26, 2017
Twenty-eight years after the company was first launched by Toyota, which was initially targeted to the United States market only, Lexus has already made its way to over 70 countries....
by - March 26, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries