Abrdn shares are dirt-cheap with a juicy dividend yield! Should I buy shares?

Jabran Khan takes a closer look at Abrdn shares as they trade at rock-bottom levels and offer an enticing passive income opportunity.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Abrdn (LSE:ABDN) share price has been on a downward trajectory for some time now. Despite this, the shares look tempting for my holdings, with some excellent fundamentals and future prospects. Should I buy Abrdn shares? Let’s take a closer look.

Abrdn shares continue to fall

As a quick reminder, Abrdn is one of the largest asset management businesses in the UK. It was previously known as Standard Life Aberdeen before it sold Standard Life to Phoenix Group Holdings last year. As an asset manager, it manages global assets including real estate, equities, and private market assets on behalf of its clients.

So what’s happening with the Abrdn share price currently? Well, as I write, the shares are trading for 151p. At this time last year, the stock was trading for 254p, which is a 40% decline. The stock market dip in March saw Abrdn shares fall and they have continued to do so while many other stocks have recovered. Inflationary pressures have not helped.

To buy or not to buy?

So what are the pros and cons of buying Abdrn shares for my portfolio?

FOR: A core aspect of my investment strategy is to buy and hold for the long term. That means I’m not going to be swayed by short-term issues and investor reactions. Abrdn is one of the largest asset managers in the UK with approximately £370bn assets under management with lots of cash on the books too. Furthermore, its restructure since disposing of its Standard Life insurance arm should support longer-term growth and increased returns too.

AGAINST: As well as geopolitical and macroeconomic factors pushing down Abrdn shares, its half-year report wasn’t the best. It reported that fee-based revenue dropped by 8% and operating profit also dropped by close to 30%. Part of that was caused by Lloyds Banking Group moving assets elsewhere but the total outflow of £35.9bn is a one-off, according to Abrdn.

FOR: At current levels, Abrdn shares look dirt-cheap to me on a price-to-earnings ratio of just six. The FTSE 100 average is 15, meaning the shares could represent value for money just now. Furthermore, they would boost my passive income stream through dividends. A dividend yield of over 9% is enticing, and Abrdn announced an interim dividend of 7.3p in its recent report. I am aware that dividends can be cancelled, however.

AGAINST: Abrdn shares have not been helped by its restructuring due to the sale of Standard Life mentioned above. In fact, it even said in its latest report that due to the current economic volatility, ambitions for growth are likely to take longer than anticipated. I view this as a short-term issue, however.

My verdict

Overall, I believe investor sentiment towards Abrdn has been a bit harsh. I view Abrdn shares as an excellent opportunity to buy cheap, dividend-paying shares in a top FTSE 100 firm. I’d be willing to buy some shares for my holdings. I expect some headwinds in the shorter term but in the longer term, I believe the business will grow, and returns, as well as the share price, will increase.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Wall Street sign in New York City
Investing Articles

Want to profit from the next stock market crash? 2 things to do now!

Our writer is not spending a moment trying to predict the timing of the next stock market crash. Instead, he's…

Read more »

Tesla building with tesla logo and two teslas in front
Investing Articles

Is Tesla stock a brilliant bargain lots of people don’t see?

Someone buying Tesla stock last month could already have seen it rise over 50%. What's going on -- and should…

Read more »

A senior woman and young girl help out in the greenhouse at the local farm.
Investing Articles

£10k invested in M&G shares 5 years ago would have generated a second income of…

Harvey Jones says the super-sized 9% yield from M&G shares has delivered a generous second income stream even though the…

Read more »

Close-up of British bank notes
Investing Articles

3 UK shares to consider for a 6.6%+ dividend yield

Christopher Ruane discusses a trio of blue-chip UK shares investors should consider for their commercial prospects and above-average dividend yields.

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

Here’s how someone could start investing for the first time with a spare £400

It doesn't have to take huge sums to start investing. Here, Christopher Ruane outlines how someone could start with just…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’ve been following Warren Buffett to handle this weird 2025 stock market! Here’s how

Christopher Ruane has been using some Warren Buffett wisdom to help him navigate uncertain stock markets. Here's the approach he's…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

£9,000 in savings? Here’s how that could earn £285 a month in passive income

Fed up of unrealistic passive income ideas? Our writer shows how putting under £10k into dividend shares now could hopefully…

Read more »

British coins and bank notes scattered on a surface
Investing Articles

I asked ChatGPT to suggest 3 UK dividend stocks for further research. Here’s what it said

Can artificial intelligence come close to the real thing in my search for long-term dividend stocks? No, but it's a…

Read more »