A.G.F. Management (TSE:AGF.B) fell to 52-week low after the Canadian mutual fund and investment company said it plans to slash its dividend by nearly two thirds and that it is revisiting its capital-allocation strategy.
Shares fell to C$7.69, the lowest intraday price in more than a year, before paring losses to trade at C$8.30, down 14.43, at 10:02 a.m. in Toronto.
The Toronto-based company said in a statement today that it will pay out its quarterly dividend of C$0.27 per share on Jan. 16, but plans to slash its subsequent dividend to just C$0.08 per share.
AGF, which has paid a dividend for 46 years as a public company, said 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 was already poised to be removed from the iShares S&P/TSX Canadian Dividend Aristocrats Index because it had not raised its dividend since 2011.
AGF is shaking up the way it returns capital to shareholders amid efforts to improve investment performance and introduce new business initiatives. The asset manager plans to renew its share buyback program in February next year.
"Revisiting the way we allocate capital as we leave 2014 is part of our continuing efforts to position AGF for growth," chief executive officer Blake Goldring said in the statement. "Our business continues to strengthen. The improving trajectory in our fund flows continues unabated and our expansion into the alternatives business has gone very well.”