The AGL Energy Ltd (ASX: AGL) dividend has been cut short following the company's 2021 full-year results in August. This has led to investors continuing to sell off the energy company's shares, leading to an almost 30% loss since the release.
At the time of writing, AGL shares are adding more pain to shareholder portfolios, down 1.12% to $5.32 apiece.
Let's take a look at the AGL dividend policy.
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A look into AGL's dividend
The embattled company paid out an interim dividend of 41 cents on 26 March which included a 10-cent special dividend. The dividend was lower than the 47 cents declared in the prior corresponding period.
More recently, AGL's final dividend came to 34 cents which was paid on 29 September. Notably, this happened to be the lowest amount given to shareholders since its half-year results in 2016.
Both interim and final dividends this year were also unfranked, as compared to the previous seven years. This means those who were eligible for any of 2021's dividends missed out on the imputed tax credits.
The full-year dividend of 2021 stood at 75 cents, a big difference from the 98 cents recorded in the 2020 financial year.
More on AGL's dividend payout ratio
In its full-year results, AGL delivered net cash from operating activities of $1,250 million, down 41% on FY20. A reduction in earnings and a small outflow from margin calls, associated with wholesale market positions, led the fall.
Underlying profit after tax dropped to $537 million, down 34% against the prior comparable period.
At the end of June, the company had approximately $600 million in cash and undrawn debt facilities available.
The full-year dividend was in line with AGL's dividend policy to target a payout ratio of 75% of underlying profit after tax. The payout ratio is essentially the amount of a company's earnings per share (EPS) that it pays out in dividends.
In response to AGL's tough market conditions, the board terminated the special dividend program.
The company noted that a sharp decline in wholesale prices for electricity and renewable energy certificates affected its financial performance. AGL regarded the 2021 financial year as one of the most difficult energy markets on record.
AGL share price summary
In 2021, the AGL share price has continued to plummet in value, losing more than 55% for investors. When factoring in the last 12 months, its shares are deeper in the red, down almost 60%.
Based on the current AGL share price, the company has dividend yield of a mammoth 14%, and a market capitalisation of $3.5 billion.
