Australia's AMP to increase dividend payout

SYDNEY - AMP Ltd, Australia's second-biggest funds manager, said today it plans a second capital return and will increase its dividend payout ratio.

"We plan to further improve cash returns to shareholders this year in two ways: first by increasing our dividend payout ratio policy from 75 per cent of the underlying contribution to 85 per cent, and increasing the franking rate on our dividends from 75 per cent to 85 per cent; and secondly, with the proposed second capital return of 40 cents a share," chairman Peter Mason said in a speech to be delivered to the annual meeting.

AMP, which has the largest network of financial planners in Australia, proposed a A$750 million ($954.24 million) capital return to shareholders in February and said at the time the prospect of another capital initiative in 2007 was high.

AMP competes in the local funds management industry against the big banks such as Commonwealth Bank of Australia Ltd, the number one funds manager, and boutique funds.

Australia has the world's fourth-largest pool of investment fund assets of about A$1 trillion. Pensions make up an estimated 70 to 80 per cent of the local managed funds market. An employer must pay 9 per cent of a worker's salary into a fund.

The federal government flagged potential changes to the way it taxed pensions in its May 9 budget to encourage workers to save more for their retirement. Shares in AMP, also a top life insurer, rose sharply the day after on the potential changes.

AMP is growing quickly in the corporate pensions market.

- REUTERS