AGL Energy Ltd (ASX: AGL) shares are an intriguing choice for passive income, given how big the dividends are expected to be in the next few years.
AGL supplies around 4.7 million customers, with Australia's largest private electricity generation portfolio within the National Electricity Market, including coal and gas-powered generation, renewable energy sources such as wind, hydro and solar, as well as batteries, and other firming and storage technology.
The business has seen earnings volatility in the last few years amid the rapidly changing operating environment.
But, the business saw profit stabilise in the FY26 first-half, which allowed for a slight dividend increase to 24 cents per security. Following that, let's look at where analysts think the dividend will go for owners of AGL shares.
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FY26
In its FY26 half-year result, the business reported that its underlying operating profit (EBITDA) was flat year over year at $1.09 billion and underlying net profit after tax (NPAT) declined 6% to $353 million.
Total AGL customer services increased by 108,000 to 4.7 million, while total generation volume declined 2.8% to 15.4 TWh. AGL also reported that its development pipeline increased to 11.3GW.
Kaluza – the software business that AGL is invested in – signed an agreement with ENGIE to deploy its energy intelligence platform.
The business also announced that construction has started on the 500MW Tomago battery and the first 250 MW of the Liddell battery is targeted for the third quarter of FY26, while the entire 500MW is targeted for the fourth quarter of FY26.
AGL also narrowed its profit guidance range for FY26. Underlying operating profit (EBITDA) is guided to be between $2 billion and $2.18 billion, while underlying net profit after tax is expected to be between $500 million to $700 million, which is quite a large range.
The company is targeting $50 million of sustainable net operating cost reductions in FY27.
The projection on Commsec suggests the business could pay an annual dividend per AGL share of 49 cents. That would translate into a grossed-up dividend yield of 7.3%, including franking credits at the time of writing.
FY27
The business could deliver investors a very small increase in the dividend per AGL share in the 2027 financial year.
AGL could deliver an annual dividend per share of 49.2 cents per share in the 2027 financial year, which would be virtually the same yield as FY26, but would represent a dividend increase nonetheless.
FY28
The final year of these projections could see a significant increase of the payout (as well as the profit).
The forecast on Commsec suggests the business could increase its annual payout per AGL share to 55.1 cents in the 2028 financial year.
If the business does deliver that forecast amount, it would translate into a grossed-up dividend yield of 8.3%, including franking credits, at the time of writing.
