Image source: Getty Images
FTSE 250 investment giant Aberdeen (LSE: ABDN) has paid the same high dividend, generating a very strong yield for the past five years. And analysts forecast it will do the same for at least the next three.
These projections look well supported to me by a reorganisation programme that continues to show real traction.
So, how much dividend income can I make going forward?
Earnings growth momentum
The reorganisation plan followed its demotion from the FTSE 100 in September 2023. It involved delivering at least £150m of cost savings to reshape the group’s core operations.
This included removing around 500 jobs and cutting management layers to boost efficiency and improve the product offering to customers.
A risk to Aberdeen is any failure to continue adhering to these principles going forward. However, by the end of 2023, it had already exceeded its initial £75m cost-cutting target. The remaining £75m in cuts is expected to be announced in its 2025 results to be released on 3 March.
Aberdeen delivered a £251m profit in its 2024 annual results against a £6m loss in 2023. And its H1 2025 results saw profit up 47% year on year to £252m. Net capital generation rose 7% to £111m, and diluted earnings per share soared 48% to 13.5p. Assets under management (AUM) also increased — to £517.6bn — beating analysts’ forecasts of £511.5bn.
In its latest trading update (Q4), AUM increased to £556m. And Aberdeen reiterated its 2026 targets of £300m+ in adjusted operating profit, and net capital generation of around £300m.
How much dividend income?
Aberdeen has paid the same 14.6p dividend every year since 2020. These have generated average annual dividend yields in those respective years of 5.2%, 6.1%, 7.7%, 8.2%, and 10.3%. The variations occur because dividend yields move as share prices (and payouts) alter.
The current dividend yield is 6.8%, based on the same 14.6p dividends and the present £2.16 share price.
Looking ahead, the consensus forecast of analysts is that Aberdeen will pay the same dividend until at least end-2028.
So, my £20,000 holding in the stock would make me £19,402 in dividends after 10 years. This also factors in the dividends being reinvested back into the shares — known as ‘dividend compounding’. It is a similar idea to leaving savings to accrue in a bank account, and it effectively turbocharges dividend returns.
On the same basis (which is not guaranteed, of course), the dividends would increase to £132,929 after 30 years. At that point, the holding would be worth £152,929 (including the original £20,000 investment).
And that could pay me a yearly income from dividends of £10,399.
My investment view
Aberdeen’s appeal to me ultimately rests on the rare combination of a dependable dividend and it building earnings momentum. This is reinforced by a restructuring plan that is already delivering exactly what management said it would.
These are the reasons why I bought the stock in the first place and have added to it since. They are also the reasons why I think the shares are well worth the attention of other investors.
I also have my eye on other high-dividend-yielding stocks in the financial and other sectors.
