The Standard Life Aberdeen share price was hammered during the March stock market crash. There is no shame in that. Plenty of other top FTSE 100 stocks also took a beating.
The fund manager’s stock has started to recover, but I still think it offers an attractive buying opportunity today. Especially since the group is standing by its dividend (unlike many FTSE 100 companies) and yields almost 9%.
Standard Life Aberdeen (LSE: SLA) struggled to convince investors that the 2017 merger between Standard Life and Aberdeen Asset Management will pay dividends. The group suffered teething problems, including a costly dispute with Lloyds, and so far the expected synergies and savings have yet to justify the link-up.
Standard Life Aberdeen share price rebounds
In early March, the group reported a 12.5% fall in annual fee-based revenue to £1.6bn, despite improving investment performance. Then came the Covid-19 crash. The Standard Life Aberdeen share price collapsed by almost half, hitting just 174p at the market low on 23 March.
At The Motley Fool, we believe the most exciting time to buy top FTSE 100 stocks is right after they have been hammered by a crash. Those who bought on that dip will have been rewarded, as the stock is up a third since then. However, do not despair if you missed that opportunity, it still trades well below its valuation before the crisis.
Better still, investors enjoy more dividend visibility. Last month, the group said it was pressing ahead with its £300m final dividend payment. Investors will have been delighted by chairman Sir Douglas Flint’s protective attitude towards the group’s 1m private investors. As he made clear, many are retired and dependent on dividend income to get by.
He also made it clear that the group is in a position to make the payment, helped by selling investments in India. That left it with £1.7bn of surplus capital at the time.
A top FTSE 100 income stock
That leaves the Standard Life Aberdeen share price yielding a hugely generous 8.9%. Dividend cover is thin at 0.9 times earnings, so in the longer run, investors will want to see those earnings pick up. But Flint’s words suggest the dividend will not be scrapped lightly.
Standard Life Aberdeen does look slightly expensive, trading at 17.5 times forecast earnings. You have to take valuation metrics like the P/E ratio with a pinch of salt these days, but if that worries you, there are cheaper FTSE 100 stocks out there.
The next leg of the stock market recovery could prove tricky as the scale of the looming recession sinks in. However, the group may benefit from its Asian expertise, as this region seems likely to lead the recovery.
The Standard Life Aberdeen share price looks tempting, if you take a long-term view. You don’t get many dividends like this right now.
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Harvey Jones 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.