Ameriprise Financial, Inc. (NYSE:AMP) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 2nd of August in order to be eligible for this dividend, which will be paid on the 16th of August.
Ameriprise Financial’s next dividend payment will be US$0.97 per share. Last year, in total, the company distributed US$3.88 to shareholders. Calculating the last year’s worth of payments shows that Ameriprise Financial has a trailing yield of 2.6% on the current share price of $149.93. If you buy this business for its dividend, you should have an idea of whether Ameriprise Financial’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Ameriprise Financial paid out a comfortable 25% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we’re glad to see Ameriprise Financial’s earnings per share have risen 17% per annum over the last five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Ameriprise Financial has lifted its dividend by approximately 19% a year on average. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Is Ameriprise Financial an attractive dividend stock, or better left on the shelf? Companies like Ameriprise Financial that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. Overall, Ameriprise Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Ever wonder what the future holds for Ameriprise Financial? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.