Assured Guaranty (AGO) Dividend Report

Updated 3/6/25

Assured Guaranty Ltd. (NYSE: AGO) operates in a niche that many investors don’t pay much attention to—municipal bond insurance. The company essentially acts as a backstop for bondholders, stepping in to ensure payments are made if the issuer defaults. This kind of financial guarantee business thrives in uncertain times, when municipalities and structured finance issuers need extra security.

For dividend investors, AGO presents an interesting mix of steady payouts, a low payout ratio, and consistent share buybacks. It’s not the highest-yielding stock on the market, but it’s built for sustainability. Let’s break down what makes AGO worth a closer look.

Key Dividend Metrics

🟢 Forward Dividend Yield: 1.57%
🟢 Trailing Dividend Yield: 1.43%
🟢 5-Year Average Dividend Yield: 1.88%
🟢 Annual Dividend Payout: $1.36 per share
🟢 Payout Ratio: 18.05% (plenty of room for growth)
🟠 Dividend Growth: Consistent but not aggressive
🟢 Ex-Dividend Date: March 5, 2025
🟢 Next Dividend Payment Date: March 19, 2025

AGO doesn’t offer a massive yield, but what it does provide is a reliable, well-covered dividend that has room to grow.

Dividend Overview

Looking at the numbers, AGO’s 1.57% yield might not grab the attention of hardcore income investors, but that’s only part of the story. This stock has a history of steady payouts, and with a payout ratio of just 18%, there’s no sign of trouble ahead. In fact, there’s a strong case for future dividend increases.

A key factor to consider is how AGO returns capital to shareholders. Beyond its dividends, the company regularly buys back its own shares. These buybacks reduce the number of shares outstanding, which helps boost earnings per share over time. It’s a shareholder-friendly move that adds another layer of value.

Dividend Growth and Safety

🟢 Dividend Growth Potential – AGO has a habit of raising its dividend, but at a measured pace. The low payout ratio means there’s flexibility for more meaningful increases.

🟢 Dividend Safety – With a stable business model and strong profitability, there’s little risk of a dividend cut.

🟠 Dividend Growth Rate – While consistent, AGO’s dividend growth isn’t particularly fast. Investors looking for rapid annual hikes might find it underwhelming.

One thing that stands out is how well-protected AGO’s dividend is. The company has over $1.49 billion in cash and generates solid free cash flow. Even during tough market conditions, it’s highly unlikely that AGO would have to pull back on its dividend.

Chart Analysis

Trend and Moving Averages

The stock has been in an overall uptrend since mid-2023, but recent price action suggests a shift in momentum. Looking at the Wyckoff Market Cycle, AGO appears to have moved through a strong markup phase throughout the second half of last year, reaching a peak near 96.50 before rolling over.

The 50-day moving average (orange line) has been a key level of support during the rally, but the stock has now broken below it. That’s often an early signal of potential weakness. Meanwhile, the 200-day moving average (blue line) is still trending upward, suggesting that the broader trend is intact. The stock is currently testing support near 86.72, a level that may determine whether this pullback is just a healthy consolidation or the start of a deeper decline.

Volume and Institutional Activity

Looking at volume, there have been a few notable spikes, particularly in mid-July and late October. These volume surges often signal institutional activity, whether it’s accumulation or distribution. The most recent days show lower-than-average volume, which suggests the selling pressure isn’t overwhelming just yet.

Relative Strength and Recent Candlestick Action

The Relative Strength Index (RSI) sits at 68.36, meaning the stock was approaching overbought conditions recently but is now cooling off. If RSI drops toward 50, it could indicate more downside before stabilizing.

The past five candlesticks tell an interesting story. The long wicks on some of these recent daily candles suggest uncertainty, with bulls and bears fighting for control. If the stock can reclaim the 50-day moving average, it would be a sign that buyers are stepping back in. However, if it continues drifting lower, a test of the 200-day moving average near 83 wouldn’t be out of the question.

Analyst Ratings

🟢 Upgrades

• Keefe, Bruyette & Woods recently raised its rating for Assured Guaranty from market perform to outperform. The price target was adjusted from 92 to 105, reflecting confidence in the company’s strong financial position and steady performance in the financial guarantee sector. Analysts highlighted AGO’s ability to generate consistent cash flow and maintain profitability, even in a challenging interest rate environment.

🔴 Downgrades

• UBS Group took a more cautious approach, maintaining a neutral stance while adjusting the price target from 84 to 87. The downgrade was attributed to concerns about revenue growth slowing in the near term. Analysts pointed to market volatility and potential challenges in the municipal bond insurance space that could weigh on earnings, despite the company’s overall financial stability.

🟠 Consensus Price Target

The average 12-month price target from analysts currently sits at 103.33, suggesting a potential upside of about 12.5% from the stock’s current trading level. While some analysts see room for continued growth, others remain cautious about short-term headwinds that could impact profitability. The mixed sentiment reflects both confidence in AGO’s long-term fundamentals and a recognition of near-term uncertainties in the financial markets.

Earnings Report Summary

Assured Guaranty Ltd. (AGO) wrapped up its latest earnings report with a mix of positives and some areas of concern. The company, a leader in financial guaranty insurance, showed strength in new business growth and shareholder returns, but profits took a noticeable hit compared to last year.

Fourth Quarter 2024 Highlights

Net income for the quarter came in at $18 million, or $0.35 per share, which is a sharp drop from the $376 million and $6.40 per share reported in the same quarter last year. A big part of this decline was due to market fluctuations and a shift in investment income. On an adjusted basis, operating income landed at $66 million, or $1.27 per share, compared to $338 million and $5.75 per share a year earlier.

On the bright side, new business remains strong. The company wrote $186 million in gross premiums for the quarter, a solid number that reflects continued demand for its financial guarantee products. Shareholders’ equity per share also ticked up to $108.80, showing that even with income volatility, the company’s balance sheet remains solid.

Full Year 2024 Highlights

For the full year, AGO posted $376 million in net income, or $6.87 per share, which is down from $739 million and $12.30 per share in 2023. Adjusted operating income also saw a dip, coming in at $389 million, or $7.10 per share, versus $648 million and $10.78 per share last year.

One area where AGO stood out was capital returns. The company returned $570 million to shareholders in 2024, with $502 million spent on share buybacks and $68 million paid out in dividends. These moves helped support per-share value and demonstrated management’s commitment to rewarding long-term investors.

What Management Had to Say

CEO Dominic Frederico acknowledged the earnings decline but pointed to several positives. He highlighted record year-end highs in key per-share metrics like shareholders’ equity and adjusted book value. He also noted that the stock price jumped 20 percent in 2024, building on the previous year’s gains.

Key Financial Metrics

• Adjusted operating shareholders’ equity ended the year at $114.75 per share, up from $106.54 in 2023.
• Adjusted book value rose to $170.12 per share, compared to $155.92 the previous year.

While profits saw a dip, AGO continued delivering strong results in terms of business growth, capital strength, and shareholder returns. Looking ahead, management seems confident in the company’s ability to navigate market challenges while maintaining its financial stability.

Financial Health and Stability

AGO’s financials highlight a company with strong profit margins and solid liquidity.

• Profit Margin: 41.82% (indicates strong profitability)
• Operating Margin: 57.86% (efficient operations)
• Return on Equity (ROE): 6.93% (stable but not exceptional)
• Total Cash: $1.49 billion
• Total Debt: $1.78 billion
• Debt-to-Equity Ratio: 32.11% (manageable levels)

One concern is that AGO’s revenue has been trending down. The latest quarterly report showed a 16.7% decline in revenue, and earnings took a massive 95.2% hit year-over-year. While this kind of fluctuation isn’t uncommon in financial services, it’s something to keep an eye on.

Despite these challenges, AGO remains financially strong. It has more than enough cash to handle its debt, and with $758.88 million in levered free cash flow, the company is still generating plenty of excess cash to support dividends and buybacks.

Valuation and Stock Performance

From a valuation standpoint, AGO looks reasonably priced.

• Trailing P/E: 12.62
• Forward P/E: 13.04
• Price-to-Book Ratio: 0.79
• Price-to-Sales Ratio: 5.68

Trading at just 0.79 times book value, AGO appears undervalued compared to its $108.85 per share book value. This suggests that the stock may be flying under the radar, at least from a value investor’s perspective.

Stock performance has been relatively stable, with a 52-week range between $72.57 and $96.50. Its beta sits at 1.11, meaning it moves slightly more than the overall market but isn’t excessively volatile.

For investors who like buying quality stocks at a discount, AGO could be an interesting candidate. It’s not flashy, but it trades below book value and continues returning capital to shareholders.

Risks and Considerations

🔴 Revenue Decline – The recent 16.7% drop in revenue raises concerns about the company’s ability to maintain consistent growth.

🟠 Earnings Volatility – Quarterly earnings fell 95.2% year-over-year, which suggests unpredictable profitability in the near term.

🟠 Interest Rate Sensitivity – As a financial insurer, AGO’s business is tied to interest rates. Rising rates can affect demand for municipal bond insurance.

🟠 Slow Dividend Growth – While AGO’s dividend is safe, the pace of increases has been moderate rather than aggressive.

🟢 Buybacks Enhance Shareholder Value – Even if the dividend growth isn’t rapid, AGO makes up for it by repurchasing shares, which boosts per-share earnings over time.

Final Thoughts

Assured Guaranty is the kind of stock that doesn’t get much attention but quietly delivers steady returns. It’s not a high-yield play, but its dividend is well-covered, with significant room for growth. The stock trades below book value, profits remain strong, and management is committed to shareholder returns through both dividends and buybacks.

For investors who prioritize safety and long-term value, AGO is worth considering. The business model is resilient, the balance sheet is solid, and while revenue has been shaky recently, the overall financial position remains strong.

It may not be a fast-moving growth stock, but for those looking for a steady and dependable dividend payer with the added bonus of share buybacks, AGO checks a lot of the right boxes.