What is the AGL dividend payout ratio?
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In February, the AGL Energy Ltd. (ASX:AGL) cut its interim dividend by 60% as the energy company released its first-half results. This caused the company’s stock to drop briefly at the time before AGL’s stock price rebounded and headed north again.
As of Wednesday’s market close, AGL shares were trading at $8.30 each.
Below, we take a look at AGL’s dividend policy and payout ratio.
An overview of AGL’s dividend history
On March 30, the company paid an interim dividend for fiscal year 22 of 16 cents, significantly lower than the 41 cents reported in the prior corresponding period.
Management noted that the lower payment would allow AGL Australia and Accel Energy to manage capital for future growth and maintain debt.
However, when we compare to past dividend payouts, we have to go back to 2007 to see a lower dividend from AGL.
In addition, the last three AGL dividends paid to shareholders have not been franked, unlike the previous eight years. This means that those entitled to recent dividends have missed out on tax credits.
The dividend for fiscal year 21 was 75 cents, compared to 98 cents recorded in fiscal year 2020.
And with the FY22 interim dividend at 16 cents, the final dividend is unlikely to match the FY21 annual dividend.
Learn more about AGL’s dividend payout ratio
In its results for the first half of FY22, AGL generated net cash from operating activities of $661 million, up 9% from the first half of FY21. largely explained by an increase in working capital, which included a positive development in green certificate assets and a large inflow of margin calls.
AGL said that more than offset a reduction in profits.
Ultimately, underlying net income after tax (NPAT) fell to $194 million, down 41% from the prior comparable period.
The company had about $700 million in cash and unused credit facilities at the end of December.
The interim dividend was in line with AGL’s dividend policy of achieving a payout ratio of 75% of underlying profit after tax. The payout ratio is basically the amount of earnings per share (EPS) of a company that it pays out in the form of dividends.
Following AGL’s upcoming spin-off, the Board of Directors is proposing the respective dividend policies for each entity. They are the following:
- AGL Australia: 60% to 75% of underlying NPAT
- Accel Energy: 80% to 100% of free cash flow after managing net finance costs
AGL Share Price Summary
In 2022, AGL’s stock price continued to rise in value, gaining more than 35% for investors.
However, looking at the past 12 months, its shares are in the red, down almost 5%.
AGL has a dividend yield of 6.02% and a market capitalization of approximately $5.58 billion.