Goodyear Reinstates Dividends After 11 Years

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The largest U.S. tire maker, The Goodyear Tire & Rubber Company (NASDAQ:GT), announced Friday that it will start paying dividends again. The company last paid a dividend in 2002. The Goodyear Tire & Rubber Company (NASDAQ:GT) will pay 5 cents per share on December 1 to shareholders of record on November 1. The company expects its operating income for the current year to touch $1.5 billion, reports Jeff Bennett of The Wall Street JournalThe Goodyear Tire & Rubber Company (NASDAQ:GT) expects to generate positive cash flow through 2016, excluding pension funding, the company said.


Goodyear: A decade full of challenges

The tire maker has faced several obstacles over the past few years, including employee strikes, job cuts, plant closures, tumbling share prices and asset sales. In 2011, the company shut down its Union City, Tenn. plant, which made 1,900 workers unemployed. The Goodyear Tire & Rubber Company (NASDAQ:GT) has exited its farm-tire business. In 2006, the company also faced a three month long strike. The Goodyear Tire & Rubber Company (NASDAQ:GT)’s stock fell below $3.50 a share during the global financial crisis.

On Friday, The Goodyear Tire & Rubber Company (NASDAQ:GT) also announced it would buyback $100 million of its own shares. The share buyback and dividend indicate that the worst is over for the company. The company has been working on a turnaround plan that helped it survive the global economic downturn and return to profitability.

Goodyear shifting focus to high-end tires

In the process, The Goodyear Tire & Rubber Company (NASDAQ:GT) shifted its focus from low-end tires to high-end tires. Low-end tires have miserable profit margins. In contrast, high-end tires are complex to manufacture, but they generate very high profit margins. The high-end tires sell for more than $130 apiece, and now account for 75 percent of the company’s total sales, up from 60 percent in 2007. The Akron, Ohio-based company is also developing tires that help improve fuel efficiency.

The Goodyear Tire & Rubber Company (NASDAQ:GT) shares surged 2.01 percent to $22.68 at 10:17 AM EDT. The stock is still trading far below its all-time high of $36.57 set on June 6, 2007.

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