AMP Ltd (ASX: AMP) shares are once again offering investors some welcome passive income.
The S&P/ASX 200 Index (ASX: XJO) financial stock has been struggling over recent years.
The wealth manager last paid out a dividend back in October 2020.
But in a sign things may finally be turning around, the board declared a final dividend of 2.5 cents per share, 20% franked, when the company announced its full-year results on 16 February. This will have hit shareholders' bank accounts on 3 April.
That's not quite enough to make up for the 4.2% fall in AMP shares over the past year. But with the partial franking credits, it comes close.
How much passive income will my $8,000 June investment in AMP shares have yielded?
AMP shares are currently trading for $1.09 apiece.
That works out to a trailing yield of 2.3%.
On the day the AMP board declared its revived dividend, shares closed at $1.14.
ASX 200 investors who were drawn by the renewed dividend payment and bought on that day will be earning a yield of 2.2%. Or $175 in passive income from an $8,000 investment.
But if I'd been brave and bought shares near the lows on 30 June, I could have bought the stock for 96 cents per share.
Now my yield on those same AMP shares has grown to 2.6%.
And I'd have earned a very welcome $208 in passive income from that investment already.
Not to mention realising a 14% share price gain, which would have seen me bank capital gains of another $1,083.
Now admittedly I'm cherry-picking the AMP share lows from last June with the benefit of hindsight. And a tumbling stock may, of course, continue its slide after you buy in.
But if you do manage to buy in near the lows – via good luck, extensive research, or perhaps good investing advice – it can really boost your passive income stream for as long as you hold that stock.
