The Goodyear Tire & Rubber Company (GT)  

​Goodyear increases dividend 43 percent


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Paul Conley | FlashRatings | Thursday, September 15, 2016 8:05 PM EDT
Goodyear Tire & Rubber Co. said it will increase its quarterly dividend to 10 cents a share from 7 cents, a whopping 43 percent increase, part of a plan by the tire maker to return some $4 billion in cash to shareholders.

The announcement came ahead of a meeting with stock analysts Thursday in Boston. Goodyear (GT) also reaffirmed its fiscal 2016 financial targets, which include expectations of cumulative free cash flow of between $4.3 billion and $4.9 billion from 2017 to 2020.

The decision to boost dividends comes as Akron-based Goodyear said it’s having some particularly good years.

Sales of tires for use on 17-inch and larger rims on sports-utility vehicles have risen more than 10 percent annually since 2013, according to a presentation by Chief Executive Officer Richard Kramer. And those larger tires earn some $25 in profit for the company - a far better performance than the $9 profit from smaller sizes.

The increased dividend is payable to shareholders of record as of Nov. 1, and will be included in the quarterly dividend payment slated for Dec. 1.

Goodyear is the world’s third-largest manufacturer of tires,according to data from fiscal year 2015 compiled by Modern Tire Dealer. Japan’s Bridgestone is the largest manufacturer, and France’s Michelin is second.

Analysts had no immediate reaction to the news. Goodyear has 100 percent positive ratings over the past year, with a median price target of $37
Shares rose 1.58, or 5.13 percent, Thursday to 32.39.