Over the years, the AMP Ltd (ASX: AMP) dividend has been a favourite of income investors across Australia.
However, that cannot be said about the financial services company today.
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What's happened to the AMP dividend?
Prior to the Royal Commission, AMP regularly shared a large portion of its bountiful earnings with investors in the form of dividends.
However, since paying a dividend of 28 cents per share in both FY 2015 and FY 2016 and then 29 cents per share in FY 2017, AMP's dividends have collapsed along with its earnings.
For example, in FY 2018 AMP cut its dividend to 14 cents per share, didn't pay a dividend in FY 2019, and then paid a dividend of 10 cents in FY 2020. Though, it is important to highlight that the latter dividend was a special one relating to the AMP Life asset divestment. Had that sale not been made, AMP would most likely not have paid a dividend.
Unfortunately, things are likely to remain tough for income investors in FY 2021, with the AMP board deciding against paying an interim dividend during the first half and looking unlikely to pay a final dividend with its full year results.
Management explained: "The board continues to maintain a conservative approach to capital management to support the transformation of the business. In line with this approach, the board has resolved to not declare an interim 2021 dividend. The capital management strategy and payment of dividends will be reviewed following the completion of the demerger in 1H 22."
When will AMP pay one again?
According to a recent note out of Citi, its analysts aren't recommending AMP shareholders hold their breath for a dividend in the near term.
Its analysts aren't expecting a dividend to be paid in FY 2022 or FY 2023. The broker feels FY 2024 is when dividends will resume and is forecasting a 6 cents per share partially franked dividend.
Citi currently has a high risk neutral rating and $1.25 price target on the company's shares.
It commented: "While the [investor day] material provides welcome further transparency and on FY23 earnings the stock looks inexpensive, there remain a lot of moving parts. So, for now, we retain our Neutral, High Risk call and A$1.25 TP."
