Citing a shift in capital allocation strategy, AGF Management Ltd. (TSX:AGF) said Tuesday it intends to cut its dividend from $0.27 per share to $0.08 per share in the year ahead.
The firm announced that its board has declared a $0.27 dividend per share on both its class B non-voting shares and the class A voting common shares. That dividend will be payable on Jan. 16, 2015 to shareholders of record on Jan. 7, 2015. However, the company is planning to drop the dividend to $0.08 per share on both classes for the first quarter of 2015.
The move to cut the dividend comes amid changes to its capital allocation strategy for 2015 that, the firm says, “will result in retained capital being deployed to initiatives with greater potential to create shareholder value. These include the existing share buyback program and preserving flexibility to execute the company’s growth strategy.”
AGF says that it intends to file to renew its share buyback program when the current program expires in February 2015.
The firm also says that it “remains committed to paying a sustainable dividend, and considers dividends — along with share buybacks — to be effective mechanisms to return value to shareholders.” AGF says that the dividend will continue to be reviewed by the board on a quarterly basis, “with a focus on growing it over the longer term as cash flows increase.”
“Revisiting the way we allocate capital as we leave 2014 is part of our continuing efforts to position AGF for growth,” said Blake Goldring, chairman and CEO of AGF. “The capital allocation approach and sustainable dividend, with a yield more consistent with that of our peers, allows us to further our objective of creating long-term shareholder value.”
“Execution, improving investment performance, increasing assets under management, and building on partner and client relationships are key areas of focus for AGF,” said Kevin McCreadie, president and chief investment officer at AGF Investments Inc. “Retaining capital to preserve flexibility and to invest in AGF, enables us to fuel the company’s momentum. There is an opportunity to build on our investment management platform and to continue to improve our investment performance, while accelerating product development — all in a manner that helps our clients and investors succeed.”