AMP Ltd (ASX: AMP) shares dropped off the radar for most passive income investors in 2021 and 2022.
That's because for several years prior, the S&P/ASX 200 Index (ASX: XJO) financial stock had been struggling. With profits and revenue sliding, management suspended the final dividend payment in 2020.
In a sign that the business had turned a corner, the board recommenced dividend payments in 2023. AMP has since delivered two dividends in 2023 and two in 2024, all of them franked at 20%.
As for the passive income in 2024, the two AMP dividends totalled 4 cents a share.
At yesterday's closing price of $1.32 a share, that sees the ASX 200 financial stock trading on partly franked trailing yield of 3.0%.
While that's less than you can get on many term deposit accounts today, it's worth noting that AMP shares have gained more than 42% in 2024 as well. And you certainly won't be getting that from any cash accounts.
As for that passive income…
Are AMP shares a good buy for passive income?
Sequoia Wealth Management's Peter Day believes passive income investors may be better off waiting to buy AMP shares.
Day has a hold rating on the ASX 200 financial stock.
"At its first half results in early August 2024, the company revealed it had returned $963 million in capital to shareholders since August 2022," Day said (courtesy of The Bull).
Day continued:
AMP had reduced shares on issue by 20% between August 2022 and June 2024. It had reduced debt by $191 million in the first half of fiscal year 2024.
The shares have risen from 93 cents on January 2 to trade at $1.33 on October 3. After the [share] buy-back finishes, we expect the company to focus on re-establishing a dividend payout ratio at the 2024 full year result.
The company reported its FY 2023 results on 14 February, a day that saw AMP shares close 10.3% higher.
Commenting on the passive income outlook at the time, management said AMP's $350 million tranche 3 capital return would progress with a combination of the final dividend, totalling $55 million, alongside further dividends and/or an on-market share buyback of up to $295 million.
This week, AMP reported it bought back just over 1.9 million shares on Monday. That brings the total number of AMP shares removed from the market to a little more than 207.1 million.
