When dividend shares fall, revenue seekers get up. That’s as a result of a decrease share worth means a better yield, all else being equal. Two high-yielding FTSE 100 revenue shares each took a beating in October. So which seems to be the higher purchase immediately?
Aberdeen’s comeback
Aberdeen Group (LSE: ABDN) fell 9.13% final month, derailing its latest restoration. It was lastly shaking off the after-effects of the disastrous 2017 merger with Commonplace Life that was imagined to create an investment-management powerhouse. As a substitute, the mixed group struggled with weak funding efficiency, buyer withdrawals and the lack of main mandates. Outflows reached £32.9bn in 2017 then £40.9bn in 2018. Its flagship funds dissatisfied and the enterprise spent years restructuring.
There have been indicators of progress not too long ago, helped by its buy of the Interactive Investor platform. October’s weak point additionally displays wider nervousness about monetary shares, alongside lingering issues concerning the asset supervisor’s restoration.
Aberdeen’s third-quarter buying and selling replace (21 October) confirmed belongings underneath administration and administration up 4% this yr to £578.9bn. Interactive Investor attracted £2.5bn of web inflows, up 32%. However its adviser enterprise suffered one other £700m of outflows. The shares fell greater than 3% on the day.
I have already got asset supervisor publicity by way of FTSE 100 high-yielders Authorized & Basic and M&G. However I can see the attraction of Aberdeen, given its trailing yield of 6.6%.
But the forecast yield is identical for 2026 and 2027. That’s hardly shocking as the full dividend has been frozen at 14.6p per share for the final 5 years. Aberdeen’s price-to-earnings ratio of 13.3 seems to be cheap. Dangers embrace continued buyer withdrawals if inventory markets battle, which will even squeeze funding efficiency and commission-related charges.
I believe Aberdeen is value contemplating for long-term revenue seekers who aren’t already overloaded with insurance coverage shares, as I’m. However I don’t like that dividend freeze.
NatWest takes a much bigger hit
The opposite alternative is NatWest (LSE: NWG), which I do maintain. Its shares slumped 15.8% in October, significantly greater than Aberdeen.
The trailing yield jumped to five.6% in consequence. That’s decrease than Aberdeen’s, however take a look at this — forecasts recommend a yield of 6.4% in 2026 and seven.01% in 2027. These are mighty will increase and up to date expertise suggests NatWest could also be good for it. The board hiked in its interim dividend 50%.
Friday’s (30 October) third-quarter outcomes landed badly. Income have been broadly in step with expectations, however administration merely reaffirmed its full-year targets moderately than elevating them as hoped. The outlook for web curiosity revenue dissatisfied, with competitors squeezing margins. The shares plunged 8.75% on the day.
UK banks have had an incredible run however the troubled UK economic system may hit product demand and drive up unhealthy money owed. The sector escaped a serious new windfall tax within the Funds, however the risk lingers.
NatWest nonetheless made a £2.2bn revenue in Q3, and trades on a stupidly low cost ahead price-to-earnings ratio of simply 7.8. Of the 2, I believe it gives much better worth, and is properly value contemplating in November. For traders who’ve sufficient monetary shares, this FTSE 100 share yielding 7% can also be value contemplating…
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Harvey Jones owns shares in Authorized & Basic, M&G and NatWest.
