Ameriprise Financial (NYSE: AMP) announced board approval to extend its current share repurchase program by up to an additional $1 billion through March 2009. The current buyback program was approved in March 2006 and authorized repurchase of up to $750 million through March 2008. According to a recent 10K filing, at the end of 2006, the company had a balance of $366 million that could be used to repurchase shares under the March 2006 program.
In addition to the repurchase program expansion, the company hiked its quarterly dividend from $0.11 per share to $0.15 per share with the May 4 declaration.
PAYOUT YIELD ANALYSIS
Based on the progress against the March 2006 program, we estimate that the annualized repurchase rate will be $400 million over the next 2 years, well within the bounds of the current authorization. With 246 million shares outstanding, the $400 million annualized buyback will yield $1.63 per share. The new annualized dividend of $0.60 per share combined with the $1.63 from the repurchase program will result in a Total Payout of $2.23 over the next 4 quarters. At $55 per share, the Total Payout Yield is projected to be 4.1%.
- Payout Yield Staff