The AMP Limited (ASX: AMP) share price is down 13%, with the market not impressed by the FY22 result despite the ASX financial share announcing that it was going to pay a dividend.
It has been a painful few years for shareholders, with AMP profits sinking following the Royal Commission into financial advice.
AMP has finally announced a dividend for investors. Yet, a return to making a statutory net profit after tax (NPAT) in the FY22 report was not enough to impress the market.
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What was in the AMP result?
AMP revealed that it made a statutory NPAT of $387 million, a turnaround from the $252 million loss in FY21.
However, the underlying NPAT dropped from $280 million to $184 million. The company said this was a result of assets under management (AUM) suffering due to volatile investment markets, repricing in its wealth management businesses, and a weaker net interest margin (NIM) for AMP Bank.
AMP dividend
AMP hadn't paid a dividend to shareholders for a few years, but the ASX financial share declared a final dividend for the 2022 financial year of 2.5 cents per share, with franking of 20%.
At the current AMP share price, that represents a partially franked dividend yield of 2.2%.
This is part of the company's $1.1 billion plan to return capital to shareholders. In FY22, it delivered $267 million of a targeted $350 million share buyback.
This dividend amounts to around $75 million.
Will there be future AMP dividends?
AMP didn't give much guidance about dividends in FY23.
It said that returning capital to shareholders remains one of its "key strategic priorities for 2023".
But, the company did say that it continues to maintain a conservative approach to capital management to support the transformation of the business and maintain balance sheet strength.
It intends to return the $1.1 billion as a result of previously announced business sales.
While AMP is unlocking value for shareholders by divesting parts of the business, I think it's likely that (some of) the cash could be sent shareholders' way through a combination of dividends and share buybacks.
But, in terms of paying dividends from AMP's ongoing operations, I think the focus will be on AMP ensuring that it can create a sustainable future and retaining profit for re-investment.
Before today's result, estimates on Commsec suggested that AMP might pay an annual dividend per share of 4 cents in FY23 and 5.2 cents in FY24.
At the current AMP share price, excluding the impact of possible franking credits, that could be a dividend yield of 3.5% in FY23 and 4.6% in FY24.
