General Motors sales were up 2.1 percent last year worldwide, putting it third on the global automaker ranking, and, as we told you earlier today, its 2014 profit dropped 26 percent to $2.8 billion on recall woes. Yet The General's balance sheet is still strong enough, thanks in part to high-margin SUVs and pickups, that investors wonder why it isn't handing over more money in dividends. At the end of January GM said it would hold pat on its dividend of 30 cents per share, leading investors to complain. This week in its latest financial report the automaker said it would increase the dividend 20 percent, and later this year would look at "further return of capital to shareholders" assuming it can get the recall fiasco concluded.
Even with another strong showing predicted this year, one issue causing GM frugality is a $9 billion commitment to R&D spending and a slew of new vehicle launches. And back to that recall situation, even when the compensation overseer sorts out and pays the final claims, which last stood at 50 approved, it has a potential fine due to the Department of Justice and possible civil suits waiting.
GM's chief financial officer said that until those clouds clear, the company wants to sit on "the high end" of a cash pile between $20 and $25 billion; it has about $40 billion in total liquidity. That compares to Ford's cash stash of $22 billion and Fiat-Chrysler's stash of $27.6 billion. The 20-percent dividend bump would add $400 million to shareholder payouts, but the shareholders want GM to disburse about $10 billion of its hoard back to them, or boost the share price with a buyback.
Even with another strong showing predicted this year, one issue causing GM frugality is a $9 billion commitment to R&D spending and a slew of new vehicle launches. And back to that recall situation, even when the compensation overseer sorts out and pays the final claims, which last stood at 50 approved, it has a potential fine due to the Department of Justice and possible civil suits waiting.
GM's chief financial officer said that until those clouds clear, the company wants to sit on "the high end" of a cash pile between $20 and $25 billion; it has about $40 billion in total liquidity. That compares to Ford's cash stash of $22 billion and Fiat-Chrysler's stash of $27.6 billion. The 20-percent dividend bump would add $400 million to shareholder payouts, but the shareholders want GM to disburse about $10 billion of its hoard back to them, or boost the share price with a buyback.
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