Ameriprise Boosts Shareholder Value - Analyst Blog
December 08 2011 - 7:00AM
Zacks
On Wednesday, Ameriprise Financial Inc. (AMP)
announced that it has raised its quarterly cash dividend. This is
the fifth dividend rise for the company since 2005, when it became
a publicly traded company. During that period, the company paid
quarterly dividend of 11 cents per share.
This time, Ameriprise declared a quarterly cash dividend of 28
cents per share, payable on February 24, 2012 to shareholders of
record as on February 2010. Hence, the annual dividend payable to
the shareholders now stands at $1.12 per share, a jump of about 22%
from the prior annual dividend of 92 cents.
Earlier in the second quarter of 2011, Ameriprise had raised its
quarterly dividend to 23 cents per share from 18 cents. Amazingly,
even at the height of the financial crisis in 2008, Ameriprise
increased its quarterly dividend by 2 cents to 17 cents.
Furthermore, Ameriprise is also actively boosting its
shareholders’ wealth through share repurchases. Through September
30, 2011, the company has repurchased $1.2 billion of shares and
still has $1.7 billion available in its share repurchase
authorization, which will expire in June 2013.
Hence, it can be said that the company is quite sincere about
enhancing the shareholders’ value regularly through dividend hikes
and share buyback programs. This also reflects Ameriprise’s strong
financial backbone even during the sluggish economic recovery.
Similar to Ameriprise, one of the industry participants –
BlackRock Inc. (BLK) is also an active enhancer of
shareholder value through dividend hikes. BlackRock has been
increasing its dividend at regular intervals. Since 2005, it has
also hiked its quarterly dividend nearly 360% from 30 cents per
share in 2005 to the present $1.375.
Our Viewpoint
Though there are concerns over the sluggish market recovery,
improvement in retail client activity as well as decent growth in
Advice & Wealth Management and Asset Management businesses
would drive Ameriprise’s operating leverage in the upcoming
quarters. Furthermore, Ameriprise’s capital deployment activity
will boost investors’ confidence.
Currently, Ameriprise’s shares retain a Zacks #3 Rank, which
translates into a short-term ‘Hold’ rating. Also, considering the
fundamentals, we are maintaining a long-term “Neutral”
recommendation on the stock.
AMERIPRISE FINL (AMP): Free Stock Analysis Report
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