Entering text into the input field will update the search result below

Ameriprise: Providing Returns In Good Times And Bad

Jun. 10, 2020 3:28 AM ETAmeriprise Financial, Inc. (AMP)2 Comments


  • Ameriprise Financial showed resiliency with continued net investment inflows during the pandemic.
  • The company has outperformed the S&P 500 over the long run due to its resilient business model.
  • Aggressive share buybacks and a dividend increase with a low payout ratio contribute to the total return story.
  • Shares have material upside from the current level.

Investment Thesis

Ameriprise (NYSE:AMP) is a large and well-established financial services firm with 986 billion in assets under management. The firm showed strong resiliency during the pandemic with continued net investment inflows even during the stock market downturn. While some may believe Ameriprise’s fortunes are tied to the ups and downs of the stock market, I will show why that is not necessarily the case. I addition, I believe there is remaining upside even after the recent run-up and will show why.

Share Performance

Ameriprise’s recent share performance has been largely affected by volatility in the market. As seen in the 6-month chart below, the stock had relatively low volatility in the pre-pandemic time period, followed by deep underperformance relative to the S&P 500 at the trough of the crisis. As of today, it still underperforms the market by 600 bps.

(Source: Yahoo Finance)

This short-term underperformance, however, masks the inherent strengths in Ameriprise’s business model, which has demonstrably outperformed the S&P 500 by a wide margin since its spinoff from its parent company, American Express (AXP), in 2005.

(Source: Dividend Channel)

As seen above, $10K invested in Ameriprise back in 2005 with dividend reinvestment would be worth $62,715 today, representing a total return of 527% and an impressive 13% CAGR. This far outpaces the $35,000 that the same investment would be worth had it been invested in the S&P 500, with an inferior 250% total return and an 8.9% CAGR.

As the long-term market returns on average 10-11% per year, the couple of extra percentage points in a 13% CAGR makes a big difference when the effects of compounding are factored in.

Resilient Business Model

From an outsider’s lens, one may view Ameriprise’s performance as being inextricably tied to the stock market. That’s is not the case, however, as Ameriprise has demonstrated that

This article was written by

Gen Alpha profile picture
Build sustainable portfolio income with premium dividend yields up to 10%.

I'm a U.S. based financial writer with an MBA in Finance. I have over 14 years of investment experience, and generally focus on stocks that are more defensive in nature, with a medium to long-term horizon. My goal is to share useful and insightful knowledge and analysis with readers.  Contributing author for Hoya Capital Income Builder. 

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.