Aberdeen (LSE: ABDN) is not the flashiest name in the FTSE. But for income investors, it looks to have a lot going for it right now.
The shares offer a chunky 7% dividend yield that analysts expect to remain unchanged until the end of 2028. And there may be capital gains too, as it looks undervalued on key measures against its peers.
These positive factors are underpinned by the company’s recent run of results. They show clear progress in its ongoing restructuring plan.
So, is now the time for me to add to my holding in this global investment management firm?
What’s the plan?
Aberdeen began restructuring shortly after being demoted from the FTSE 100 in September 2023. This involves simplifying its business, cutting costs by £150m, and focusing on areas where it has genuine competitive strength.
From a £6m IFRS loss in 2023, Aberdeen delivered a £251m profit in its 2024 results, released on 4 March 2025.
Its April Q1 trading update saw the firm forecast a £300m+ operating profit and around £300m of net capital generation in 2026.
And its H1 2025 results, published on 30 July, saw IFRS 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. And its most recent update — 22 October’s Q3 numbers — showed AUM rise 6%.
Aberdeen also reiterated its 2026 targets of £300m+ in adjusted operating profit, and net capital generation of around £300m.
Share price gains in view too?
Ultimately, it is earnings (‘profits’) growth that drives any company’s dividends and share price higher over time.
A risk for Aberdeen is any further rise in the cost of living that could prompt customers to withdraw funds.
However, the stock looks undervalued to me on several key measures compared to its competitors. Its 0.7 price-to-book ratio is the lowest in its peer group. This includes RIT Capital Partners at 0.8, M&G at 2.2, Bridgepoint Group at 2.6, and Legal & General at 6.2.
Its 11.9 price-to-earnings ratio also looks cheap against its peers’ average of 37.3. And so does its 2.9 price-to-sales ratio compared to its competitors’ average of 3.9.
How much could I make in dividends?
Aberdeen has paid the same 14.6p dividend every year since 2020. And consensus analysts’ forecasts are that it will continue to do so each year to the end of 2028.
On the current share price of £2.10, this gives a dividend yield of 7%. By comparison, the average dividend yield of the FTSE 250 is just 3.4%.
So, my present £10,000 holding in the firm could potentially make me £10,097 in dividends after 10 years. This is based on an average 7% yield, although this can change a lot over time. It is also based on the dividends being reinvested back into the stock.
On the same basis, the dividends would be £71,165 after 30 years. Including the £10,000 stake, the holding would be worth £81,165 by then. And this would pay me £5,682 a year in dividend income by that point!
Given this and the potential for share price gains too, I will be adding to my holding in the company very soon.
