This FTSE 250 action offers a juicy yield of 9.8%. Will it last?

It can be tempting when looking for dividends just to focus on high yields on the flagship Ftse 100 index. Notable examples here include Phoenix groupis 9.4% and 10.2% in M & g. But the Ftse 250 The index also contains some high -performance actions.

One is an asset manager Aberdeen cluster (LSE: ABDN), with its 9.8%yield.

The history of dividends here is not exciting. The Divivenddo per action has been stable for years after the most recent cut.

But past performance is not necessarily a guide of what will happen in the future. If the FTSE 250 company simply maintains its dividend by action without increasing it, its prospective performance is 9.8%. That certainly seems attractive to me.

Promising recovery signs

I have been looking at Aberdeen's actions as a possible addition to my portfolio for some time. But for a long time I have been concerned about commercial performance quite dazzled and inconsistent and what it means to the dividend.

After all, as the shareholders of Aberdeen in the long term they know very well, it is not guaranteed that no dividend Dura.

But last year's performance provided some signals of a business that may be in repair. The flows of net client funds were still negative, but much smaller than the previous year. Even so, I see the risk that if investors continue to withdraw more than they put, it could damage the long -term profitability of Aberdeen.

The net capital generation increased around a third, which I see as a positive sign to maintain the dividend. Profit diluted by action also increased strongly.

Even so, the point on the outputs worries me. It helps to explain why adjusted operational income showed an year -on -year decrease of 6%.

It is not yet out of the forest

So, although the results contained some promising signs of progress, I think management has work to be done.

One of the key tasks is to reverse the net flow of funds, so that Aberdeen is dealing with larger non -minor amounts of money in general. I see it as useful for long -term profits.

If the FTSE 250 business can improve its net capital generation, that will help increase dividend coverage. I think that in turn it could also be good for the price of shares, which has fallen 21% in the last five years. That contrasts very badly with a 39% increase for the FTSE 250 index in general during that period.

Aberdeen expects to increase the generation of net capital to around 300 million next year, an increase of approximately a quarter of 2024.

I feel increasingly sure that Aberdeen will keep his dividend. In fact, in its results, the company's executive director said that his strategy should allow Aberdeen “To maintain the historical dividend by an materially greater and sustainable capital generation. “

But although commercial performance seems to be in motion in the right direction, I would like more evidence that the change is sustained and sustainable.

Then, instead of buying now, I will continue to keep Aberdeen in my observation list. I will search to see if you are able to maintain a high generation of net capital and also move from negative net to positive flows.