How much is the AGL dividend payout ratio?

What is AGL’s dividend really worth?

| More on:
A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news about the Macquarie share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • AGL shares treaded lower yesterday, down 1.31% to $8.30
  • The company slashed its most recent dividend to 16 cents per share following tough trading conditions
  • Nonetheless, the interim dividend was in line with AGL’s dividend policy, targeting a payout ratio of 75% of underlying profit after tax

In February, the AGL Energy Ltd (ASX: AGL) board cut its interim dividend by 60% as the energy company released its first-half results. This prompted a short slump in the company’s shares at the time before the AGL share price rebounded and headed north again.

At Wednesday’s market close, AGL shares were trading at $8.30 apiece.

Below, we dive into the AGL dividend policy and its payout ratio.

A look at AGL’s dividend history

On 30 March, the company paid out an FY22 interim dividend of 16 cents — considerably lower than the 41 cents declared in the prior corresponding period.

Management noted the lower payout would enable AGL Australia and Accel Energy to manage capital for future growth, and maintain debt.

However, when measuring up against prior dividend payments, we need to go back to 2007 to see a lower dividend from AGL.

In addition, the last three AGL dividends paid to shareholders have been unfranked, in contrast to the previous eight years. This means those eligible for any recent dividends missed out on the tax credits.

The FY21 full-year dividend stood at 75 cents, which compares to the 98 cents recorded in the 2020 financial year.

And with FY22’s interim dividend at 16 cents, the final dividend is unlikely to match FY21’s full-year dividend.

More on AGL’s dividend payout ratio

In its H1 FY22 results, AGL delivered net cash from operating activities of $661 million, up 9% on H1 FY21. This increase was largely due to an uptick in working capital, which included a positive movement in green certificate assets and a large inflow from margin calls.

AGL said that this largely offset a reduction in earnings.

On the bottom line, underlying net profit after tax (NPAT) dropped to $194 million, down 41% from the prior comparable period.

The company had approximately $700 million in cash and undrawn debt facilities at the end of December.

The interim dividend was in line with AGL’s dividend policy to target a payout ratio of 75% of underlying profit after tax. The payout ratio is essentially the amount of a company’s earnings per share (EPS) that it pays out in dividends.

Following AGL’s upcoming demerger, the board proposes the respective dividend policies for each entity. They are as follows:

  • AGL Australia: 60% to 75% of underlying NPAT
  • Accel Energy: 80% to 100% of free cash flows after servicing net finance costs

AGL share price summary

In 2022, the AGL share price has continued to rise in value, gaining more than 35% for investors.

However, when factoring in the last 12 months, its shares are in the red, down almost 5%.

AGL has a trailing dividend yield of 6.02%, and a market capitalisation of roughly $5.58 billion.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

a woman with a huge happy smile on her face eyes a jar of coins next to her on a table.
Dividend Investing

Experts name 2 ASX dividend shares to buy next week

These dividend shares have been named as buys...

Read more »

two young boys dressed in business suits and wearing spectacles look at each other in rapture with wide open mouths and holding large fans of banknotes with other banknotes, coins and a piggybank on the table in front of them and a bag of cash at the side.
Dividend Investing

These 2 ASX 200 shares are going ex-dividend next week

We take a look at the two ASX 200 shares trading without rights next week.

Read more »

A happy construction worker leap-frogs over another as a third looks on
Dividend Investing

Locked in the CSR dividend? Here’s the payment info

Own CSR shares? It's time to check your bank account.

Read more »

A woman puts money in her piggy bank all rugged up for the winter cold.
Dividend Investing

ANZ rewards shareholders with its latest dividend. Here are the details

Payday has come for those who are eligible for the bank's dividend.

Read more »

Dividend Investing

2 excellent ASX dividend shares that analysts rate as buys in July

Here are two dividend shares rated as buys...

Read more »

Two women shoppers smile as they look at a pair of earrings in a costume jewellery store with a selection of large, colourful necklaces made of beads lined up on a display shelf next to them.
Dividend Investing

Here’s why I think Lovisa could be a top ASX dividend share

This retail ASX share could provide good dividend income for investors.

Read more »

Gold bars and Australian dollar notes.
Resources Shares

Do Evolution Mining shares pay a dividend?

The ASX 200 mining shares are known as good dividend payers -- is Evolution among them?

Read more »

a pile of colourful trainer shoes and sandshoes fashioned to look like a large shoe.
Retail Shares

What is the current dividend yield for Accent shares?

What kinds of dividends is Accent Group paying these days?

Read more »