Investors Cheer GM Boosts to 2016 Outlook, Dividend, Buybacks

General Motors Co. (NYSE: GM) took a page from Ford Motor Co.’s (NYSE: F) book Wednesday morning, announcing an improved profit outlook for 2016, a dividend hike and an increase in its stock repurchase program. Ford on Tuesday said it expected 2016 adjusted profit to be at the high end of its previously stated range and that it had declared a special dividend of $0.25.

2015 was a very good year for automakers. U.S. consumers bought 17.25 million new light vehicles last year, the highest total ever, and most forecasts are looking for slightly better performance in 2016. GM and Ford decided to share the wealth with stockholders probably because forecasts for 2017 are not quite as robust.

GM said Wednesday morning that it now expects adjusted earnings per share of $5.25 to $5.75 in 2016, up from a prior estimate of $5.00 to $5.50. The automaker also added $4 billion to its stock buyback program, lifting the authorized total to $9 billion and extending it through 2017. The board also authorized a 6% increase in the quarterly dividend, from $0.36 to $0.38 per share.

CEO Mary Barra said:

We made significant progress executing our strategic plan and the results are being demonstrated through our improved earnings. Moving forward, we will continue to keep the customer at the center of everything we do. We are making the right investments and taking the actions necessary to lead in the transformation of personal mobility, and positioning the company to continue to drive shareholder value.

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GM stock traded up more than 2% Wednesday’s morning, at $30.94 in a 52-week range of $24.62 to $38.99. The consensus price target on the stock is $42.00.

Ford shares traded down more than 3% to $12.50, in a 52-week range of $10.44 to $16.74. The consensus price target on Ford stock is $17.59.