If I’d invested $8,000 in AMP shares in June here’s how much passive income I’d be earning today

If I'd invested $8,000 in AMP shares in June here's how much passive income I'd be earning today

AMP shares are once again offering investors passive income following the company's first dividend payment in almost three years.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published May 15, 2023 12:26 pm AEST

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.

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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.

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