Aberdeen Asset Management: A FTSE 100 Dividend-Raising Star

LONDON -- In an outcome that's tough on investors, the FTSE 100 (INDEX: ^FTSE  ) has failed to deliver a rising dividend payout over the last few years.

Just look at the iShares FTSE 100 ETF, for example. This is an exchange-traded fund that tracks the benchmark index, and we can see the aggregate payment from Britain's top 100 companies has yet to regain its pre-recession peak:

Year

2007

2008

2009

2010

2011

Dividend per share (pence)

19.1

20.2

17.1

16.2

18.1

But some companies within London's premier index have performed well on dividends, despite these austere times, and this series aims to seek them out. One such name is Aberdeen Asset Management Group  (LSE: ADN.L  ) .

The big question is whether the company's dividend can continue to outperform its index. Let's take a closer look.

Aberdeen Asset Management is an international investment management group, managing assets for both institutions and private individuals. With the shares at 328 pence, the market cap is around 3,382 million pounds. This table summarizes the firm's recent financial record:

Year

2007

2008

2009

2010

2011

Revenue (million pounds)

347.84

430.09

421.9

638.2

784

Net cash from operations (million pounds)

(29.93)

64.5

17.1

212.6

366.4

Adjusted earnings per share (pence)

12.29

9.45

6.52

14.09

20.13

Dividend per share (pence)

5.5

5.8

6

7

9

So, the dividend has increased by 64% during the last five years -- equivalent to a 13.1% compound annual growth rate.

Describing itself as a pure asset management company, Aberdeen employs around 1,900 people in 23 countries to manage other people's money.

Last year, the company earned about 94% of its revenues from management fees, 5% from performance fees and 1% from transaction fees. Those cash-generating incomes were derived from some 184 billion pounds of assets under management. Of that figure, roughly 44% was in equities, 24% in fixed income, 15% in alternative investment strategies, 12% in property, and 5% in the money markets.

Although the directors expect slow global growth for years ahead, they seem confident that opportunities to work assets hard for their owners will continue to exist. If that's true, it can only be good news for the dividend, judging by past performance.

Aberdeen's dividend growth score
I analyse four different features of a company to judge whether its dividend can continue to rise:

  1. Dividend cover: Adjusted earnings covered the recent dividend more than twice. 4/5
  2. Net cash or debt: At the last count, there was net cash on the balance sheet. 5/5
  3. Cash flow: Good support for profits from cash flow with both trending up. 5/5
  4. Outlook and recent trading: Healthy recent trading and a cautiously positive outlook. 4/5

Overall, I score Aberdeen Asset Management 18 out of 20, which encourages me to believe the firm's dividend can continue to outpace dividends from the FTSE 100.

Foolish summary
Aberdeen is looking good from all four sides, which makes the prospects for the dividend look promising.

Right now, the forecast full-year dividend for 2013 is 12.4 pence per share, which supports a possible income of 3.8%. That looks quite attractive given the strength of recent trading.

Aberdeen Asset Management Group is one of several dividend outperformers on the London stock exchange. There's one man who's as keen as I am to find, and invest in, them. I suggest you read all about his best investment ideas now in this free, limited-time report, while you have the chance: "8 Income Plays Held by Britain's Super-Investor." This free report analyzes the 20 billion pound portfolio of legendary high-yield expert Neil Woodford. Click here now to discover his favorite dividend opportunities with good growth potential.

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Further investment opportunities:

Kevin does not own any shares mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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