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A part of my funding routine in the beginning of every month is dedicating time to search for new dividend shares to purchase. I’ve been looking the FTSE 100 and settled on a few revenue shares that supply index-beating payouts.
The 2 corporations are Abrdn (LSE:ABDN) and Aviva (LSE:AV.), which boast dividend yields of 6.4% and 6.6%, respectively.
Let’s discover the outlook for every in flip.
The Abrdn share worth is up 16% over the previous yr. This Footsie firm gives a spread of funding companies and derives the vast majority of its income from the UK.
First, it’s necessary to acknowledge the funding supervisor confronted difficulties final yr. The corporate’s 2022 efficiency was somewhat disappointing. Internet working income fell 4% to £1.5bn and underlying revenue was down nearly a fifth at £263m.
Nonetheless, for my part, unstable market situations are largely liable for these figures and there are causes to be optimistic concerning the agency’s prospects in 2023.
Final yr, the enterprise acquired Interactive Investor (ii). This improves Abrdn’s direct-to-consumer providing in UK financial savings and wealth. Certainly, ii’s development seems promising.
|ii Efficiency Metrics||FY22 Outcomes vs FY21|
|Internet working income||£176m (+38%)|
|Adjusted working revenue||£94m (+109%)|
|Price/revenue ratio||47% (18ppts higher)|
|Buyer numbers||402,000 (flat)|
As well as, I’m happy the corporate maintained its annual dividend at 14.6p per share, which suggests Abrdn is eager to protect its status as one of many high UK dividend shares to purchase.
That being stated, dividend cowl isn’t as robust as I’d like, however I’m hopeful the inventory may gain advantage from simpler buying and selling situations if the macroeconomic image begins to enhance. Plus, it’s value noting that including worth for shareholders through share buybacks stays a key precedence.
General, if I had some spare money, I’d purchase Abrdn shares whereas the corporate continues to streamline its enterprise and strengthen its buyer base.
In distinction to Abrdn, the Aviva share worth has slumped 16% on a 12-month foundation. The multiline insurer focuses on the British, Irish, and Canadian markets.
Aviva seems like one other stable dividend share in my view. The corporate anticipates a 32.5p per share payout this yr. What’s extra, the enterprise additionally expects to launch a brand new share buyback programme to accompany its full-year outcomes subsequent week.
Speedy development in Aviva’s bulk annuity enterprise is encouraging. So too is the agency’s place as one of many largest fairness launch suppliers within the UK. Each of those options imply the enterprise is nicely positioned to learn from elevated demand for retirement funding options. On this context, demographic adjustments from growing old populations are a long-term tailwind for Aviva shares.
Investing within the insurance coverage big isn’t risk-free. Like most life insurers, Aviva has giant liabilities on its steadiness sheet. When outlined profit pension schemes confronted margin calls on legal responsibility pushed funding (LDI) methods after final yr’s ‘mini’ finances, the group’s capital and liquidity was examined. Future turbulence in bond markets may ship additional shocks.
Nonetheless, Aviva’s a nicely capitalised enterprise. It confirmed admirable resilience within the face of market turmoil. With diversified income streams and market-leading distributions on supply, that is one other FTSE 100 dividend share I’d purchase in March with some spare money.