The AGL Energy Limited (ASX: AGL) share price has just hit a 17-year low, pushing its dividend yield above 9.2% What’s going on?
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The AGL Energy Limited (ASX: AGL) share price is having an absolute shocker today.
AGL shares are today down a nasty 1.88% to $8.89 a share at the time of writing. And that’s not even the lowest AGL went today. Soon after the market opened, this ASX energy company hit $8.65 a share. That price is the lowest AGL shares have been since, wait for it, December 2004. Back then, George W. Bush had just been re-elected president of the United States, for some context.
As you might expect, today’s move is just the latest for this beleaguered ASX blue chip. Since topping out at roughly $27.70 a share back in 2017, AGL has now fallen close to 70% from those highs.
So why is this company at a 17-year low today?
AGL share price hits 17-year low
Well, as my Fool colleague Brooke covered earlier today, AGL shares have been hit hard by the news of the company’s CEO and managing director, Brett Redman, suddenly resigning with immediate effect. Judging by the share price performance today, that was exactly what investors didn’t need to hear at this difficult time for this ASX stalwart.
It was only on 30 March that AGL (and Redman) announced a bold plan to structurally separate AGL into two separate businesses. The ‘new AGL’ will house the company’s energy retailing business, while ‘PrimeCo’ will be the home of AGL’s generation assets.
The market didn’t take too kindly to this proposal, considering that before today, AGL shares had fallen more than 7% since it was announced.
But the more bargain hunt-inclined investors might be looking at AGL today with an eye on its dividend.
A 9.2% dividend yield?
AGLs share price collapse has further increased the company’s trailing dividend yield. At the current share price, this yield has exploded north of 9%. It has settled on 9.23% at the time of writing. That’s objectively a pretty juicy proposition for any ASX investor in this era of near-zero interest rates.
AGL hasn’t made a peep on its dividend policy since August last year. Back then, the company announced that it would effectively be paying out 100% of its earnings as dividends over FY2021 and FY2022. That’s up from its old policy of 75% of earnings. The extra 25% of earnings will be paid as special dividends.
We saw this in action last month. On 26 March, AGL paid out an interim dividend of 31 cents per share, and a special dividend of 10 cents. Even adding these two payouts together, we still only get 41 cents a share. That’s below 2020’s interim dividend of 47 cents.
So unless AGL completely reverses its course under the new CEO, at least long-suffering investors look set to continue to receive hefty dividends from AGL for at least the next year or 2.
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Motley Fool contributor Sebastian Bowen 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.