Ally Financial Inc. (NYSE:ALLY) has announced another share buyback program. It mentioned that its board of directors authorized the repurchase of up to $1.25 billion shares, starting from the third quarter of 2019 through the second quarter of 2020.
This is in addition to the company’s existing 2018 capital plan, which includes share repurchases of up to $1.0 billion, starting from the third quarter of 2018 through the second quarter of 2019. As of Dec 31, 2018, nearly $440 million worth of share buyback authorization remained.
Jeffrey J. Brown, the company’s chief executive officer stated, “Returning capital to our stockholders remains an essential component of our capital allocation framework and I'm pleased to announce a 25% increase in our share repurchase program.”
Notably, the company’s 2018 capital plan also includes a dividend hike. It announced a 13.3% hike in dividend in January 2019. Before this, it hiked dividend by 15.4% in July 2018.
Ally Financial has come a long way in improving its balance sheet and fundamentals. Moreover, the Fed has announced that the company is now not required to take part in annual stress tests. This provides Ally Financial the flexibility to announce capital deployment plans.
Driven by healthy liquidity position, the company remains well poised to increase shareholders’ wealth through regular dividend payments and share buybacks. Also, its capital deployment activities look sustainable, given its earnings strength.
Several other companies, including Associated Banc-Corp (NYSE:ASB) , Old National Bancorp (NASDAQ:ONB) and Stifel Financial Corporation (NYSE:SF) announced additional buyback authorizations and/or rise in quarterly dividends.
Shares of Ally Financial have gained 5.4% over the past six months against the industry’s decline of 11.1%.
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