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A rising share worth usually means a falling dividend yield, within the absence of dividend progress. FTSE 250 share Aberdeen Group (LSE: ABDN) has not grown its dividend for a few years. However, regardless of its share worth rising by 41% in simply 12 months, it nonetheless yields 7.5%.
Might now be the time for traders to think about this high-yield share?
Robust potential however an uneven efficiency
I ought to point out that I’ve owned the FTSE 250 share earlier than.
Again then, I felt the corporate had underlying strengths, corresponding to a big buyer base and a transparent worth proposition. Its enterprise mannequin had confirmed it might do effectively even when it didn’t all the time constantly ship.
That inconsistency was a part of the issue, although. Whereas it appeared to have the makings of a robust enterprise, it didn’t all the time appear to capitalise on them successfully.
Have issues modified?
Dividend appears to be like enticing
There are some blended indicators about whether or not the enterprise is on extra of a fair keel than it as soon as was. Total, I feel issues are trying fairly good.
Within the first half of this yr, the corporate’s diluted earnings per share grew a really spectacular 48% yr on yr.
Nonetheless, adjusted internet working income slid 6% and internet flows had been adverse, that means extra money left the corporate’s funds than was put into them.
Seen positively, that might be an indication that the asset supervisor is taking a extra strategic strategy, centered on worthwhile enterprise. Over time, it expects to develop.
The corporate has stated it’s dedicated to supporting the dividend. Whether or not that occurs will rely upon monetary efficiency.
However I see administration’s dedication as a optimistic signal that it’s focussed on the best way to keep the shareholder payout.
Within the first half, paying bizarre dividends price Aberdeen £130m. That was amply lined by internet money flows from working actions of £241m.
One to think about
There may be a variety of work nonetheless to be achieved to unlock the total potential of the FSTE 250 agency, I reckon.
But it surely has been getting its act collectively previously a number of years and I feel that reveals by in its first-half profitability.
I additionally suppose it’s mirrored within the robust efficiency of the share worth over the previous 12 months.
It’s nonetheless round two-thirds decrease than it was again in 2015. That reveals how far the corporate has fallen in some traders’ favour.
But it surely has well-known manufacturers, together with not solely Aberdeen itself but additionally the funding platform interactive investor. The corporate has a sizeable buyer base and has demonstrated that it may generate sizeable quantities of extra money over time.
Taken along with its concentrate on sustaining its dividend on the present stage, I see this as an earnings share for traders to think about.
