Ameriprise Financial Hikes Quarterly Dividend 8.4% (AMP)
By: Ned Piplovic,
Ameriprise Financial, Inc. (NYSE:AMP) rewarded its investors with an 8.4% boost to its quarterly dividend payout, which marked the company’s 12th consecutive year of annual dividend hikes.
In addition to the annual hikes over the past dozen years, the company offers its shareholders a 2.5% current dividend yield, which is higher than the company’s own average yield over the past five years. While yields frequently come at the expense of declining share prices, that is not the case here. In addition to the Ameriprise Financial’s long-term 11-fold share price rise since the 2008 financial crisis, the company’s share price has been rising steadily over the past 26 months. The combined effects of the share price growth and increasing dividend distributions rewarded the company’s shareholders with double-digit-percentage total return over the past 12 months.
Ameriprise Financial set its next pay date for May 18, 2018, when the company will distribute its next quarterly dividends to all shareholders of record prior to the March 4, 2018, ex-dividend date.
Ameriprise Financial, Inc.(NYSE:AMP)
Founded in 1894 as the Investors Syndicate in Minneapolis, Minnesota, Ameriprise Financial, Inc., provides various financial products and services to individual and institutional clients. The company conducts business through its Advice & Wealth Management, Asset Management, Annuities and Protection segments. The Advice & Wealth Management segment provides financial planning and advice, as well as full-service brokerage services. Additionally, the Asset Management segment offers investment management, advice and investment products to retail, high-net-worth and institutional clients through unaffiliated third party financial institutions and institutional sales force. Furthermore, the Annuities segment provides variable and fixed annuity products to individual clients through advisors and financial institutions. Lastly, the Protection segment offers various products to address the protection and risk management needs of retail clients, including life, disability income and property casualty insurance.
The company hiked its $0.90 quarterly dividend payout 8.4% over the $0.83 quarterly dividend amount from the previous period. This new quarterly distribution amount converts to a $3.60 annualized distribution for 2018 and a 2.5% forward yield, which is 15.7% above Ameriprise Financial’s own average five-year average dividend yield of 2.2%.
The company hiked its annual dividend distribution amount every year since it started distributing dividends in late 2005, following a spin-off from American Express earlier that year. Over those 12 years, Ameriprise Financial enhanced its total annual dividend amount more than eight-fold by maintaining an average growth rate of 19.1% per year. In addition to outperforming its own past results, the company’s current yield also outperformed the 1.61% average yield of all its peers in the National Investment and Brokerage segment and is also 13% higher than the 2.25% average yield of only dividend-paying companies in the same group.
Providing well rounded returns to its investors, Ameriprise Financial accompanied its long record of rising dividend distributions with a moderate asset appreciation. The company’s share price entered the trailing 12-month period on a slight downtrend that began in late February 2017 and continued its slow decline another 7.7% to reach its 52-week low of $120.79 on May 31, 2017. After bottoming out in late May, the share price reversed its direction into an uptrend, regained its losses by early July and continued to rise for a total gain of nearly 51% before it reached its 52-week high of $182.04 on January 12, 2018.
However, because of inflation fears, perceived market uncertainty, overall market volatility and several market selloffs in the early part of 2018, Ameriprise Financial’s shares experienced some volatility and closed on April 25, 2018, at $141.44, which was more than 20% below the January peak. While the recent share price was unfortunate for the company’s long-term shareholders, the $141.44 closing price was still an 8.1% gain over the trailing 12 months, 17.1% higher than the 52-week low from the end of May 2017 and 87% higher than it was five years earlier.
The double growth combination of raising dividends and capital appreciation rewarded shareholders with attractive returns over the past few years. While the total return over the past 12 months was 11.4%, the company rewarded its shareholders with an 18.9% total return over the past three years and more than doubled shareholders’ investment over the past five years with a 115.3% total return.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.