Member Info for FQ440MR

I bought into Aberdeen some time ago when the share price dropped to 130 and the dividend yield was around 11%. It was a calculated gamble at the time but full year results suggest that a turnaround is now likely. Ii are doing very well and will likely continue doing so. Cost cuts should stabilise the investments division. The one to look out for is Advisor. If they can turn that around, then the price should recover quickly. For now, with the added benefit of the 35m pension dividend and the now much more secure 60m phoenix dividend; i would expect the 14.6 pence annual dividend to be maintained for at least the next couple of years.

Per full year results presentation; JW advised that dividends would be maintained at 14.6p per year until dividend cover reaches 1.5x (currently 1.2x). So probably need to wait until 2027 to get a rise. Surprised the share price hasn’t made any gains the last couple of days as Aberdeen holds a 10% shareholding in Phoenix which have seen a 10% increase on results. They also increased their dividend by 2.6%. Aberdeen now make around 95m GBP in passive income each year (Phoenix 60m pension surplus 35m). So they only need to make 165 from trading activities, most of which will likely come from ii.

The reasons that the share price increased last week prior to crashing on results showing higher than expected outflows still stand. The market had calculated that the fall in inflation below 2% would likely encourage the BOE to cut interest rates at the next meet. The expectation being that lower interest rates would encourage a move away from fixed return investments to stock and shares with their improved dividend yields. This should benefit ABRDN and help stem the outflows. In the meantime, management are on a 150m cost cutting drive aimed at offsetting the loss in earnings. Earnings are likely to be lower in the second half due to outflows but also a switch to lower margin investments; price discounts at advisor and a 7m expiring discount. The hope is that the cost savings will more than offset the fall in earnings. The last dividend was funded through ongoing activities and the hope is that this will continue but ABRDN do have surplus funds that they can use to subsidise in the short to medium term if needed. They also have 500m investment in Phoenix group and 800m surplus pension, some of which they maybe able to release (subject to 35% tax). The sell off looks overdone with little more downside at the current price. Best to stick with them for now. Should be no more news to scare the market now until Feb with the Santa rally still to come.

Vodafone, Centrica and BT all have mountains of debt, so makes sense that they would want to cut the dividend to pay that down. ABRDN have no use for surplus’s cash and have been using excess to buy back shares & to support the dividend at the current level. I dont see that changing anytime soon. They still have plenty of cash to subsidise the dividend at current levels. As interest rates go down, investments should become more attractive and the current dividend yield will look even better. I agree that it looks like a case of managed decline but with the 150m annual of targeted cost cuts looking like being delivered, i think in the short to medium term the dividend will likely be maintained. Share price may go down a bit more before recovering once interest rates start to go down.