With a strong dividend yield, does this mean shareholders should invest in the company?
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The AMP Ltd (ASX: AMP) share price will be one to watch when the company reports its full-year results this Thursday. This comes as the financial services company is currently trading on a big forecast dividend yield of 9.4%.
At the time of writing, AMP shares are swapping hands for $1.065, unchanged from yesterday’s close.
What’s happened recently?
It has been a few years to forget for AMP shareholders, watching their wealth dwindle since 2018. The company’s share price has been hit heavily over time, but it appears its last worrying update pushed away investors.
In late May, AMP acknowledged that the ASIC had commenced proceedings against the company in the Federal Court. This is in relation to breaches in deducting life insurance premiums and advice service fees from superannuation accounts of deceased customers.
What’s worse is that AMP allegedly knew about the issue in the past. However, the company said it has taken action to change its policies and processes. The matter was covered in the financial services royal commission.
The news sent shockwaves through the investing world with shareholders deciding to pull their money away from the company. This, in turn, led to AMP shares further falling to an all-time record low of $1.038 last month.
How much is AMP forecasted to pay in dividends?
AMP paid a fully franked dividend of 10 cents per share to shareholders last October. While its shares continued to tumble, its dividend yield soared. It’s worth noting though that the company decided against paying a dividend during February’s earnings season.
When factoring in the current share price along with its last dividend payment, this gives AMP a dividend yield of 9.4%. However, with no news on the dividend front, it’s unlikely AMP will pay 10 cents per share in the near term. This is especially given the impact of the company repaying $5.3 million back to customer accounts in May 2020.
About the AMP share price
Over the last 12 months, AMP shares have fallen more than 23% and are down 31% year-to-date. The company’s share price has lost about 80% of its wealth from early 2018, reflecting negative investor sentiment.
Based on today’s price, AMP presides a market capitalisation of roughly $3.4 billion, with approximately 3.2 billion shares on issue.
Should you invest $1,000 in AMP right now?
Before you consider AMP, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and AMP wasn’t one of them.
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*Returns as of May 24th 2021
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.