General Motors (GM) Suspends Its Dividend ... Again

GM stock's high yield suddenly vanishes as the automaker suspends payout, share repurchases amid coronavirus crunch

Markham, Ontario, Canada - June 14, 2019: GM Canada Technical Centre campus in Markham, Ontario, Canada. General Motors Company is an American multinational corporation.
(Image credit: Getty Images)

The coronavirus outbreak has taken its toll on yet another publicly traded company's cash distribution. General Motors (GM (opens in new tab), $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 (opens in new tab)), 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%.

Kyle Woodley
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.