The coronavirus outbreak has taken its toll on yet another publicly traded company's cash distribution. General Motors (GM, $21.95) announced early April 27 that it was suspending its dividend – the company's second such move in 12 years.
GM stock, which also was forced to suspend its dividend during the Great Recession, put the pause on its 38-cent-per-share quarterly payout as one of several steps meant to fortify the company's balance sheet. General Motors also extended $3.6 billion of its three-year revolving credit agreement to April 2022, which comes roughly a week after it renewed a $1.95 billion 364-day revolving facility for use by its GM Capital arm.
GM also suspended its share repurchase program and has taken "other significant austerity measures.
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"We continue to enhance our liquidity to help navigate the uncertainties in the global market created by this pandemic," GM Chief Financial Officer Dhivya Suryadevara said in a statement. "Fortifying our cash position and strengthening our balance sheet will position the company to create value for all our stakeholders through this cycle."
General Motors' announcement comes amid a host of other dividend cuts and suspensions prompted by the COVID-19 outbreak. That includes Ford (F), which halted its dividend in mid-March.
The automotive industry in general is feeling an acute pinch from the coronavirus. During the final week of March, U.S. retail auto sales plunged 59% from J.D. Power's pre-pandemic forecast. The figure has been stabilizing – to 55%, 51% and 48% drops over the next few weeks – but still bodes poorly for automakers.
Meanwhile, General Motors and other automakers' North American plants have been shuttered since late March, with the exception of a few recent reopenings to manufacture ventilators. While they're trying to determine a plan and timetable for reopening for automaking purposes, they'll do so into an uncertain demand climate.
At current prices, GM stock would have yielded 6.9%.
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