The AGL Energy Limited (ASX: AGL) share price hit a new 52-week low yesterday. Shares in the Aussie energy producer slumped 2.1% lower to close at $10.93 per share on Tuesday. That means the AGL share price has now hit a new 10-year low with a $6.8 billion market capitalisation.
It’s been a steady decline since early 2020, but what’s going on with the Aussie utility?
Why the AGL share price is falling lower
AGL is a leading Aussie electricity and gas generator and retailer. It is part of the ‘big three’ alongside Origin Energy Ltd (ASX: ORG) and the unlisted Energy Australia.
The Aussie gentailer has a diversified portfolio of energy-producing assets across Australia. This includes coal-fired power plants, renewables (hydro, solar and wind) and gas projects.
One significant issue facing AGL is profitability. This is particularly important for AGL’s coal-fired power plants given the current low electricity prices.
Coal-fired plants are operating on tighter margins with revenue compression contributing to a negative outlook and pushing the company’s shares lower.
AGL is also facing the looming decommissioning of its Liddell coal-fired power plant with potential competitors, such as CEP Energy, keen to pick up some of the slack.
What about the company’s dividends?
The AGL share price has been under pressure in recent years. This is reflected by a 43.7% drop over the last 12 months culminating in Tuesday’s closing price of $10.93.
As such, there is one thing that AGL investors would be watching closely right now – the company’s dividend. At the current AGL share price, this translates to a 9.0% per annum yield.
AGL is scheduled to release its half-year results for the period ended 31 December 2020 (1H FY2021) tomorrow. Investors will be paying close attention to what the dividend payout looks like and the latest earnings update from across the business.
Foolish takeaway
The AGL share price has been under pressure in recent months and is at its lowest point since the global financial crisis (GFC). With the company set to release its results tomorrow, all eyes will be on the Aussie gentailer for its latest numbers.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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