Ameriprise Financial Inc's Dividend Analysis

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Assessing the Upcoming Dividend and Financial Health of Ameriprise Financial Inc

Ameriprise Financial Inc(NYSE:AMP) recently announced a dividend of $1.35 per share, payable on 2024-02-27, with the ex-dividend date set for 2024-02-08. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Ameriprise Financial Inc's dividend performance and assess its sustainability.

What Does Ameriprise Financial Inc Do?

Ameriprise Financial has emerged as a major player in the U.S. market for asset and wealth management, with around $1.3 trillion in total assets under management and advisement at the end of the second quarter of 2023. Ameriprise has one of the largest branded advisor networks in the industry, and about 80% of the company's revenue comes from its asset and wealth management segments. Ameriprise has reduced its exposure to insurance with the sale of its auto and home insurance business in 2019 and discontinuing the sale of its proprietary fixed annuities in 2020. Around 90% of the company's pretax earnings are from the United States.

Ameriprise Financial Inc's Dividend Analysis
Ameriprise Financial Inc's Dividend Analysis

A Glimpse at Ameriprise Financial Inc's Dividend History

Ameriprise Financial Inc has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a quarterly basis.

Ameriprise Financial Inc has increased its dividend each year since 2005. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 19 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Ameriprise Financial Inc's Dividend Yield and Growth

As of today, Ameriprise Financial Inc currently has a 12-month trailing dividend yield of 1.35% and a 12-month forward dividend yield of 1.37%. This suggests an expectation of increased dividend payments over the next 12 months.

Ameriprise Financial Inc's dividend yield of 1.35% is near a 10-year low and underperforms than 90.21% of global competitors in the Asset Management industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.

Over the past three years, Ameriprise Financial Inc's annual dividend growth rate was 8.60%. Extended to a five-year horizon, this rate decreased to 8.30% per year. And over the past decade, Ameriprise Financial Inc's annual dividends per share growth rate stands at an impressive 11.60%.

Based on Ameriprise Financial Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ameriprise Financial Inc stock as of today is approximately 2.01%.

Ameriprise Financial Inc's Dividend Analysis
Ameriprise Financial Inc's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Ameriprise Financial Inc's dividend payout ratio is 0.18.

Ameriprise Financial Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ameriprise Financial Inc's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Ameriprise Financial Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.

Revenue is the lifeblood of any company, and Ameriprise Financial Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ameriprise Financial Inc's revenue has increased by approximately 10.20% per year on average, a rate that outperforms approximately 57.68% of global competitors.

The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Ameriprise Financial Inc's earnings increased by approximately 14.20% per year on average, a rate that outperforms approximately 57.62% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 16.90%, which outperforms approximately 71.35% of global competitors.

Concluding Thoughts on Ameriprise Financial Inc's Dividend Outlook

In conclusion, Ameriprise Financial Inc's history of consistent dividend growth, a reasonable payout ratio, and strong profitability metrics paint a positive picture for dividend sustainability. Coupled with favorable growth metrics, Ameriprise Financial Inc appears to be in a good position to continue rewarding shareholders with dividends. However, the relatively low dividend yield compared to industry peers suggests that investors may need to weigh the prospects of dividend growth against immediate yield. As always, investors should consider their individual financial goals and consult with financial advisors before making investment decisions. For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.