Should Standard Life Aberdeen plc (LON:SLA) Be Part Of Your Dividend Portfolio?

Over the past 10 years Standard Life Aberdeen plc (LSE:SLA) has returned an average of 6.00% per year from dividend payouts. The stock currently pays out a dividend yield of 5.91%, and has a market cap of UK£10.57B. Should it have a place in your portfolio? Let’s take a look at Standard Life Aberdeen in more detail. View our latest analysis for Standard Life Aberdeen

5 questions I ask before picking a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it the top 25% annual dividend yield payer?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share risen in the past couple of years?

• Can it afford to pay the current rate of dividends from its earnings?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

LSE:SLA Historical Dividend Yield Jun 7th 18

Does Standard Life Aberdeen pass our checks?

The current trailing twelve-month payout ratio for the stock is 71.40%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 79.73%, leading to a dividend yield of 6.79%. However, EPS is forecasted to fall to £0.24 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Standard Life Aberdeen produces a yield of 5.91%, which is high for Diversified Financial stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Standard Life Aberdeen is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three pertinent aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for SLA’s future growth? Take a look at our free research report of analyst consensus for SLA’s outlook.

2. Valuation: What is SLA worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether SLA is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.