Is Ameriprise Financial Inc (NYSE:AMP) A Smart Pick For Income Investors?

Ameriprise Financial Inc (NYSE:AMP) has pleased shareholders over the past 10 years, paying out an average dividend of 2.00% annually. The company currently pays out a dividend yield of 2.43% to shareholders, making it a relatively attractive dividend stock. Does Ameriprise Financial tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Ameriprise Financial

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it paying an annual yield above 75% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it have the ability to keep paying its dividends going forward?

NYSE:AMP Historical Dividend Yield June 21st 18

How does Ameriprise Financial fare?

The company currently pays out 30.22% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect AMP’s payout to fall to 24.58% of its earnings, which leads to a dividend yield of 2.58%. However, EPS should increase to $14.57, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of AMP it has increased its DPS from $0.60 to $3.6 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes AMP a true dividend rockstar.

Compared to its peers, Ameriprise Financial produces a yield of 2.43%, which is on the low-side for Capital Markets stocks.

Next Steps:

With this in mind, I definitely rank Ameriprise Financial as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for AMP’s future growth? Take a look at our free research report of analyst consensus for AMP’s outlook.

2. Valuation: What is AMP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether AMP is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.