Is the AGL Energy (ASX:AGL) share price a buy for its 4.8 per cent franked dividend?


The AGL Energy Ltd (ASX:AGL) share price has had a tough last 12 months, falling 15.5 per cent to $22.23 in the last year. By comparison, the S&P/ASX 200 Index has gained 8.3 per cent in the same time.

AGL Energy has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas, solar and biomass.

In February, AGL Energy reported first half underlying profit increased by 27 per cent to $493 million, with earnings per share jumping 30 per cent higher to 75.2 cents.

The AGL interim dividend was raised by 32 per cent to 54 cents per share, 80 per cent franked.

For the year ending June 30th 2018,  AGL said it continues to expect underlying profit in the middle of the range of $940 million to $1.04 billion.

AGL Energy dividend

The AGL dividend jumped significantly higher last year, with this year’s dividend set to jump even higher.

Source: ASX

On a trailing basis, AGL shares trade on a 80 per cent franked dividend yield of 4.7 per cent, or 6.3 per cent when grossed up for franking credits.

AGL Energy is a sector monster, capitalised at $14.3 billion.

As such, and given the regulated and capital intensive nature of its industry, growth going forward is likely to be relatively modest, something that’s already incorporated into the company’s valuation. AGL Energy shares trade at around 14 times forward earnings.

AGL’s policy is to target a dividend payout ratio of 75 percent of annual underlying profit after tax.

The AGL dividend yield is relatively attractive, especially given interest rates are likely to remain at these current low levels well into 2019. 

Here’s how you can strike it rich in the share market…

The best way to strike it rich in the share market is to buy shares that are not only cheap, but growing quickly.

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

Best of all, the report is absolutely free, exclusively for readers of The Capital Club.

In this comprehensive free report, you’ll find the name of one ASX gold stock that’s not only profitable, but trading at less than 4 times forecast profits.

You’ll also discover the name of a company one fund manager has called the cheapest stock in the ASX 100, and you’ll read about the three catalysts that could push the share price higher in the next six months.

Finally, the report names one of the cheapest retailers trading on the ASX, a company that just picked up the assets of a distressed competitor on the cheap, paying just 2 times earnings. No wonder one top fund manager thinks its share price could at least double.

With the share prices of each of these 3 companies having the potential to double or more, you’ll want to act now. Simply click here or the button below, enter your email address, and this free report will be instantly sent to you.

See the 3 stocks

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at