Everything you need to know about the AMP dividend

Shareholders will soon be getting bigger payments.

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The AMP Ltd (ASX: AMP) dividend has just been announced alongside the FY23 half-year result.

It was a reasonably positive report for investors, with AMP Bank generating underlying net profit after tax (NPAT) of $57 million (up 23.9%) and platform underlying NPAT of $44 million (up 25.7%). Even the advice segment saw a $5 million underlying improvement, to an underlying loss of $25 million.

AMP dividend

With the business generating underlying earnings per share (EPS) of 3.8 cents (up 11.8%), AMP’s board felt confident enough to pay a partially franked interim dividend of 2.5 cents per share. The dividend will be 20% franked.

This shareholder return is on top of the $610 million of capital returned to shareholders since August 2022. A total of $140 million is expected to be sent to shareholders by 31 October 2023, through the announced interim AMP dividend and the remaining share buyback.

AMP also said that it has used some of its cash to pay down $302 million of corporate debt in July 2023.

AMP shares will go ex-dividend on 23 August 2023. That means investors need to own AMP shares by 22 August to gain entitlement to this dividend.

The payment date for this 2.5 cents per share dividend is 29 September 2023, so less than two months away.

There is a dividend reinvestment plan (DRP) – shareholders need to elect to use it by 5pm on 25 August 2023.

Can the passive income payments grow?

Before the effect of releasing this result, estimates on Commsec suggested that the AMP dividend could be 4.2 cents in FY23 and then rise to 5.4 cents in FY24 and 6.1 cents in FY25.

If AMP keeps growing its (underlying) EPS, then this will enable the board to fund larger shareholder payouts, if they think that’s the best use of the extra profit.

However, the company did say that during the FY23 first half, it completed its capital and balance sheet review and determined to pay down debt, “return capital prudently in relation to the resolution of litigation outcomes” and continue simplification of its legal and operational footprint to “benefit liquidity and cost management”.

AMP said that it will remain committed to returning surplus capital to shareholders, but “given the current uncertainty surrounding the outcome of the financial adviser class action and other litigation matters”, tranche three of the capital return program “has been paused”.

An update will be given by the company “no later” than 31 December 2023. We’ll have to see what this means for AMP dividend payments in the next couple of results.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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