Ally Financial To Start Paying a Dividend, Sets Stock Buyback Program

Ally Financial Inc. said Tuesday it will begin paying a quarterly dividend of eight cents a share and announced a new $700 million share repurchase program. The financial services company said the dividend and buyback program were part of its capital plan under the comprehensive capital analysis and review (CCAR) that the Federal Reserve OK'd in June. The new dividend will be payable Aug. 15 to shareholders of record on Aug. 1. Based on Monday's stock closing price of $17.47, the new dividend represents an annual dividend yield of 1.83%, compared with the annual payout of 2.15% for the SPDR Financial ETF and the aggregate yield of 2.10% for the S&P 500 . The stock buyback program will begin in the third quarter of 2016 and continue through the second quarter of 2017. Ally's stock, which was unchanged in premarket trade, has lost 6.3% year to date, while the S&P 500 has gained 6%.