Picture supply: Getty Photographs
Confronted with inflationary pressures, tariff issues and slowing progress throughout world markets, the FTSE 250 has nonetheless held its floor higher than many anticipated. What’s extra, the index hosts a variety of dividend-payers, a number of with yields larger than a few of the FTSE 100’s most dependable shares.
In fact, yields alone don’t inform the total story. Mid-cap shares may be extra risky, so I believe it’s crucial to look at the financials earlier than drawing any conclusions.
One recovering inventory I’ve been taking a look at lately is Aberdeen Group (LSE: ABDN). It has an 8% yield and the shares are presently buying and selling round 185p. Which means 13,500 of them could be price £25,000, producing over £2,000 a yr in passive earnings.
That’s definitely price working the numbers.
Taking a more in-depth look
Aberdeen is a worldwide funding agency providing asset administration and financial savings options. The corporate has had a tough few years, not helped by complicated branding selections following its merger with (and subsequent sale of) Normal Life.
Because of this, its shares are nonetheless down 22% over the previous 5 years.
But 2025 has been a much better story. 12 months-to-date, the share worth has climbed round 30% – in the meantime, the dividend yield hasn’t been pushed down too far. Funds seem pretty sustainable too, with a payout ratio of 82% and an uninterrupted observe file of 19 years.
That form of consistency is uncommon amongst FTSE 250 names, including to why I believe the inventory is one buyers might wish to take into account.
Profitability, nonetheless, nonetheless has some strategy to go to get better. Return on fairness (ROE) is pretty low at 6.5% whereas the working margin is round 30%. That’s respectable, however comparatively weak for an funding supervisor.
A attainable cause for this can be the rising shift from actively managed funds to low-cost passive merchandise. With Aberdeen nonetheless closely reliant on conventional fund administration, this development presents a notable problem.
Shopper focus is one other threat — earlier this yr a single mandate loss from Phoenix Group led to billions in outflows. Over-reliance on massive shoppers may simply damage earnings if extra contracts are pulled.
Nonetheless, the stability sheet appears wholesome, with £11.57bn in belongings and a debt-to-equity ratio of simply 0.11. This low leverage provides an honest stage of economic safety if markets flip tough.
Restoration potential
Regardless of the dangers, Aberdeen has been attempting to reset its narrative. Its 2022 buy of Interactive Investor helped it increase into new markets – whereas the more moderen sale of its monetary planning arm helped it refocus on core providers.
These strikes may lay the groundwork for extra steady long-term progress.
The query is whether or not the enterprise can adapt rapidly sufficient. If margins proceed to be squeezed and extra shoppers go for passive alternate options, profitability might battle to enhance. And if earnings fall too far, even a protracted observe file of paying dividends might not shield buyers from a lower.
For now, I believe it stays one of many extra dependable high-yielding shares on the FTSE 250. Whereas the dangers round fund flows and profitability are evident, the excessive yield and strong observe file nonetheless look mighty enticing.
When included as a part of a well-diversified portfolio, it may assist present monetary sector publicity whereas additionally boosting the general yield.
