While still recovering from a 45% share price decline in 2018, Ameriprise Financial, Inc. (NYSE:AMP) has already regained more than half of those losses, boosted its quarterly dividend by almost 8% and has seen technical indicators suggest a continuation of the current share price uptrend.
Ameriprise Financial saw its share price decline more than 40% during 2015. However, after reversing direction in early 2016, the share price had recovered fully by mid-2017 and continued to advance to its all-time high of more than $180 in the second week of January 2018. This growth spurt marked a share price advancement of nearly 130% over the 24 months leading to the beginning of 2018.
Despite solid financial results and rising dividend income distributions, the company’s fundamentals were unable to support the $180-plus share price. The uptrend ended in January 2018 and the share price reversed direction and pulled back over the first two quarters of 2018. Unfortunately, the overall market correction in late 2018 pushed the price further down and the stock lost 45% of its value from January to December 2018.
However, the share price has been recovering steadily since the beginning of 2019. After languishing below the 200-day moving average for more than one year, this share price recovery finally pushed the 50-day average above the 200-day average in a bullish manner on April 22, 2019. This crossover signals a higher probability that the current share price uptrend could continue for a few additional periods.
In addition to its general share price growth, Ameriprise Financial also continued to boost its annual dividend income payouts and the company’s earnings beat analysts’ expectations in all four quarters of 2018.
Financial Results
On April 24, 2019, Ameriprise Financial reported its first-quarter 2019 results. The company reported adjusted net revenue of $3.1 billion which was flat to same period last year. On the back of that revenue, the company delivered earnings of $525 million, or $3.75 per diluted share. This earnings per share figure reflected a 2% year-over-year growth and beat analysts’ expectations of $3.65 by 2.7%.
During the first quarter, the company returned $480 million to its shareholders through its share repurchase and dividend income distributions. The current quarterly dividend boost is the company’s 12th hike in the past 10 years. Furthermore, to support its continued share price growth, the company has authorized another $2.5 billion for future share repurchases.
Ameriprise Financial, Inc. (NYSE:AMP)
Founded in 1894 as the Investors Syndicate in Minneapolis, Minnesota, Ameriprise Financial, Inc., provides various financial products and services to individual and institutional clients. The company conducts business through its Advice & Wealth Management, Asset Management and Annuities and Protection segments. The Advice & Wealth Management segment provides financial planning and advice, as well as full-service brokerage services. Additionally, the Asset Management segment offers investment management, advice and investment products to retail, high net worth and institutional clients through unaffiliated third-party financial institutions and institutional sales forces. Furthermore, the Annuities segment provides variable and fixed annuity products to individual clients through advisors and financial institutions. Lastly, the Protection segment offers various products to address the protection and risk management needs of retail clients, including life, disability income and property casualty insurance.
Dividends
Ameriprise Financial has been able to hike its quarterly dividend payout by nearly 8% from the $0.90 quarterly dividend amount in the previous period to the $0.97 payout in the next upcoming round of dividend payouts. The new quarterly dividend amount is equivalent to a $3.88 annualized dividend. This annual dividend payout amount corresponds to a 2.7% forward dividend yield, which is 15.3% higher than the company’s own 2.32% average yield over the past five years. In addition to outperforming its own five-year average, the Ameriprise Financial also outperformed the 1.51% average yield of all its peers in the National Investment and Brokerage segment by 76%.
Following a spin-off from American Express in early 2005, the company enhanced its total annual dividend payout amount every year since introducing dividend distributions at the end of 2005. Over the last 12 consecutive years, Ameriprise Financial has enhanced its total annual dividend amount nearly nine-fold. This advancement corresponds to an average growth rate of 18.2%.
Investors interested in collecting the next round of dividend distributions must act quickly. To claim eligibility for receiving the upcoming $0.97 quarterly payout, investors must own shares prior to the May 3, 2019 ex-dividend date. All eligible shareholders of record before that ex-dividend date will receive the dividend distribution on the May 17, 2019 pay date.
Share Price
Riding the downtrend that began in January 2018, the Ameriprise Financial stock price leveled off and reversed direction into a slow uptrend after entering the current 12-month period. The share price gained nearly 7% before reaching its 52-week high of $151.97 on October 4, 2018. Pushed by the overall market pullback on interest rate uncertainty and fears of the escalating trade war with China, the share price dropped nearly 36% over the subsequent three months before reaching its 52-week low of $97.58 on December 24, 2018.
However, after bottoming out at the end of December 2018, the share price trend changed direction again. The share price pulled even with the level that had been reached at the beginning of the trailing 12-month period by mid-April and continued rising to deliver small one-year gains. By the end of trading on April 25, 2019, the share price had recovered more than 87% of its losses since the October peak and closed at $145.06. The April 25 closing price was 2% higher it had been than one year earlier and was also nearly 50% above the 52-week low in late December 2018.
While the dividend income contributed the majority of the growth, Ameriprise Financial also was able to deliver a one-year total return of nearly 5%. The 40% share price decline in 2015 suppressed the 51% total return over the past five years below the three-year return level. Over the past three years, Ameriprise has been able to reward its shareholders with a total return of 55%.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.
