Motley Fool Australia

Will AMP ever pay a dividend again?

asx dividend shares

The AMP Limited (ASX: AMP) share price is again on the slide today. Just two weeks ago, it looked as though the worst of the pain was over for AMP shareholders. AMP shares had risen from an all-time low of $1.60 (reached on 3 September) all the way up to $.1.87 by 24 September. Alas, that would prove to be the high point.

AMP shares have since slumped again and are down nearly 4% this morning, trading for $1.61 at the time of writing – a hair’s breadth away from its all-time low.

So is there any chance of a substantial recovery now? And will AMP ever pay a dividend again? Let’s have a look.

What’s the latest from AMP?

If you’re reading this, you would probably be aware that AMP’s once resplendent reputation is still in tatters following last year’s Royal Commission, in which AMP was exposed for some of the worst corporate conduct in Australian history.

Eye-gouging fees, charging dead people for services they obviously didn’t need and repeatedly lying to ASIC and other corporate regulators are all still in the minds of AMP investors and the Australian public. No doubt these factors are still weighing on the AMP share price.

Still, with a swanky new CEO and management team, and a fresh strategy for the future, it’s clear AMP is trying to turn things around.

What happened to AMP’s dividend?

AMP used to have a relatively good history of dividend payment. Since 2012, dividends were increased almost every year and in 2017 the company was paying out 29 cents a share. But this all changed following the Royal Commission.

In 2018 AMP paid out just 14 cents a share and this year dividends were placed on hold indefinitely. This was the sensible thing to do, in my opinion. Money was flooding out of AMP’s wealth management division and the delayed sale of the company’s life insurance arm AMP Life increased earnings uncertainty even more.

Now that the company seems to have found a path for the AMP Life sale, things are looking more stable. AMP’s $784 million share purchase plan has also been completed, as of 10 September – which was also likely holding AMP shares down.

Foolish takeaway

I think if AMP continues to steady the ship and can successfully implement its new ‘simpler AMP’ strategy, the dividends will start flowing again over the next year or two. But I wouldn’t expect any payouts to be substantial or fast-growing.

So, it’s a solid ‘wait and see’ for me on AMP for now – on both dividends and capital growth.

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Returns As of 6th October 2020

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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