AMP Limited (ASX: AMP) shares have fallen to $2.00 for the first time since listing in 1998, and are now down 42% in the last 12 months. How much further can they go?
AMP is a diversified financial services company which has its primary operations in financial advice, including financial planning and wealth management. A big part of its business is licensing other planning groups to provide advice. AMP also has capabilities in investing (AMP Capital), banking and insurance.
The AMP share price fell as low as $2.00 this morning, or a decline of around 2.9%. AMP released the details of their next dividend yesterday afternoon, showing the September distribution is estimated to be just $1.1308 per share, 90% franked.
For comparison, the interim dividend last year was $3.35 per share and in 2017 it was $5.02.
The reduced dividend coincides with increased remuneration costs following the banking Royal Commission as well as pressure from APRA.
Could AMP Be a Buy?
It could be tempting to look at AMP shares and think that the market has overreacted, and AMP shares could be a bargain. However, AMP is not out of trouble yet and has a long way to go to turn itself around.
The pressure is still high on the banking and financial services industries to clean up their act. Falling house prices and RBA rate cuts would also make me think twice about investing in a company like AMP or Commonwealth Bank of Australia (ASX: CBA) right now.
AMP might get to a stage where it would be worth considering, but I think the risks outweigh the benefits right now. I’d rather invest in one of the high-quality companies mentioned in the free report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.