Diversified financial services company AMP (ASX: AMP) has seen a sharp fall in its share price in the last month from a two year high of $5.79 to $4.90. At current prices, AMP is trading on a historic price-to-earnings multiple of 19.9 times — this is not cheap unless you believe the stock market can rally a lot further in the near term; however given the company’s diversified earnings streams and extensive network the business enjoys, it is arguably not overpriced either.
The dividend yield has improved as a result of the recent share price fall to 5.1%, which makes AMP’s dividend look relatively attractive compared with its peer group. Financial service peers such as Perpetual (ASX: PPT), IOOF Holdings (ASX: IFL) and Platinum Asset Management (ASX: PTM) are trading on dividend yields of 2.3%, 5% and 3.9% respectively.
Even after the recent drop in S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) the overall funds under management and advice (FUMA) of financial service providers will not have dramatically altered when considered based on their average FUMA. Investors who look through this short-term volatility may find they have the opportunity to purchase leading financial service providers at enticing valuations and paying reasonable dividend yields.
In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
Motley Fool contributor Tim McArthur owns shares in Perpetual.