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General Motors Company (NYSE: GM) will increase its dividend from last year’s comparable payout on March 14 to $0. 12. Despite this increase, the 1. 2% dividend yield is only a modest spice for shareholder returns.
While the dividend yield is important for income-generating investors, it’s also important to account for any significant fluctuations in the stock price, as it can sometimes offset gains from distributions. Investors will be pleased to see that General Motors’ stock value has risen 31% in the last three months, which is smart for shareholders and would likely lead to a decline in the dividend yield as well.
See our latest research for General Motors
Even a low dividend yield can be attractive if held for years. However, General Motors’ earnings more than cover the dividend. As a result, much of what he earned was reinvested back into the business.
Looking ahead, earnings are expected to increase by as much as 21. 2% over the next year. Assuming the dividend continues recent trends, it is possible that the payout ratio will reach just 3. 3% over the next year, which is within a fairly sustainable level. rank.
Although the company has a long history of dividends, dividends have been cut at least once in the past 10 years. The annual payment for the past 10 years was $1. 20 in 2014, and the recent maximum payment for the tax year was $0. 48. to a decline of about 8. 8% annually over this period. A company that reduces its dividend over time is not what we are looking for.
Since the balance sheet hasn’t been brilliant, we actually need to see profits increase over time. Encouragingly, General Motors has increased its profits by as much as 8. 9% annually for the past five years. expansion and a low payout ratio, this bodes well for General Motors customers to increase their dividend payouts in the future.
All in all, it’s positive to see dividend growth and we’re particularly pleased with its overall sustainability. The company easily earns enough to cover its dividend bills, and it’s great to see those earnings translate into cash flow. With all those points in mind, we think this stock has strong potential as a dividend stock.
It is vital to note that corporations with a consistent dividend policy will generate greater investor confidence than those with an abnormal policy. At the same time, there are other points that our readers deserve to be aware of before making a capital investment in a stock. . As an example, we know two precautionary symptoms for General Motors that you deserve to be aware of before making an investment. Isn’t General Motors the opportunity you’ve been looking for? Why not check out our selection of the most productive dividend stocks.
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