Ally launches stock buyback, first dividend as public company

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Jeffrey Brown: “The inaugural dividend since becoming publicly-traded is a critical step in returning capital to Ally stockholders.”

Ally Financial Inc., in another benchmark event during its long recovery from the Great Recession, said it is launching a stock buyback valued at up to $700 million along with its first dividend as a public company. 

The common stock repurchase program will begin in the third quarter of 2016 and continue through the second quarter of 2017.

The auto financier’s board also announced Tuesday it will begin paying a cash dividend of 8 cents per share on Aug. 15 to shareholders of record at the close of business on Aug. 1.

Both the buyback and cash dividend were included in Ally’s capital plan, which received a non-objection from the Federal Reserve Board, the company said.

“The Federal Reserve’s non-objection of these capital actions is a significant milestone to Ally and speaks to the company’s overall financial strength and continued focus on safety and soundness,” Ally CEO Jeffrey Brown said in a statement. “The inaugural dividend since becoming publicly-traded is a critical step in returning capital to Ally stockholders. Further, being able to buy back common shares will serve as a key tool for driving long-term value creation.”

Shares acquired under the buyback will be used for general corporate purposes and may be available for resale, including in connection with the company’s compensation and employee-benefit plans, Ally said.

The moves were another benchmark in the nearly 100-year-old company’s history. Ally, formerly General Motors’ lending arm GMAC, was bailed out by the U.S. government in 2009. It was renamed Ally in 2010 and completed its public stock offering in 2014.

The U.S. government cashed out its holdings in Ally in December 2014 and ultimately made about a $2.4 billion profit from its $17.2 billion bailout of the company.

Ally is scheduled to release its second-quarter results on Tuesday, July 26.

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Ally launches stock buyback, first dividend as public company