Aberdeen shares jump on hopes of ‘significant’ dividend hike

Hopes that Aberdeen Asset Management could announce a “significant” dividend hike in its forthcoming annual results have sent the group to the top of the FTSE 100 leaderboard.

The group’s plan to redeem a convertible bond in full at the start of next year will significantly boost net cash and increases the likelihood of an increased dividend payout this month, according to analysts at Numis.

After rising 3.2% yesterday, Aberdeen shares were 3.1% higher at 345.4p by late morning in UK trading, making it the second largest riser on a flat FTSE 100 behind airline giant IAG.

Aberdeen said on Wednesday it would redeem in full its 3.5% 2014 convertible bond at par on 3 January 2013.

With conversion rights at 185p a share, significantly below the current share price, Numis expects Aberdeen to garner around £80m in net cash as residual bondholders convert in full prior to the bond’s redemption.

“This implies Aberdeen will now comfortably be ahead of its regulatory capital requirement of c£200-£250m,” said Numis analyst David McCann.

“We therefore reiterate our long held view that the return to shareholders will imminently (possibly for the final 2012 dividend to be announced on November 26th and if not, almost certainly at the interims in spring 2013) significantly exceed the previous c50% ordinary dividend payout ratio (which is still the basis for the majority of consensus forecasts).”

The group, headed by CEO Martin Gilbert (pictured), will report annual results for the year to 30 September 2012 on 26 November.

Aberdeen’s full-year dividend for 2011 was 9p per share, a 29% year-on-year rise. In April it announced an interim dividend of 4.4p per share, a rise of 16% year-on-year.

 

This article was first published on Investment Week

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