Ally Financial Inc. is closer to finalizing its longstanding goal of reinstating a common stock
dividend and a share repurchase program, probably in 2016.
That’s because the Federal Reserve gave Ally permission to complete the redemption of about $1.3 billion worth of preferred stock, effective Dec. 14, Ally said on Thursday.
Under the terms of Ally’s Series G Preferred shares, Ally couldn’t pay a common stock
dividend or repurchase shares.
The preferred shares were created as a result of the financial crisis that led up to the former GMAC’s U.S. government bailout in late 2008. Ally already redeemed about $1.3 billion worth of the preferred shares in April.
“Addressing this remaining legacy security will remove the restriction the company had on offering common equity distributions and position Ally to meet its objective of initiating a dividend and share repurchase program in 2016,” Chief Executive Jeffrey Brown said in a
written statement.
Last month, Brown said in a conference call that Ally would start small. “Any dividend will be a
modest dividend to start with,” he said. “And we’ll look to grow that dividend over time.”
