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.

If you liked the article, share on:

Topics: gm, united states

Comments

Recommended

At Aston Martin, there is the Valkyrie. In the near future, there might also be a Valhalla. Another name that starts with letter “V,” the Valhalla has just been reserved...
by - November 16, 2018
The up-and-coming Audi E-tron GT four-door sports car is one of the electric cars that the premium carmaker has promised to deliver before 2025. But as early as now, some...
by - November 15, 2018
Magneti Marelli S.p.A., the high-end maker of automotive parts and components, will be soon own by a Japanese company. This comes as it current owner, Fiat Chrysler Automobiles has inked...
by - November 15, 2018
It has already been months since Czech carmaker Skoda unveiled the comprehensively refreshed – both in terms of design and engineering -- Fabia hatchback. Now, the car company will be...
by - November 14, 2018
After VIN registrations revealed months ago that Porsche was planning a new 718 Cayman T, new details have surfaced that about the hardcore model. According to a report by Auto...
by - November 14, 2018