Passive income — cash that lands in your account without you doing much — is one of the most powerful tools for long‑term wealth building.
And investment manager Aberdeen (LSE: ABDN) is a FTSE name that quietly offers more of it than many investors realise.
It features robust underlying cash flows, a long record of steady dividends, and strongly improved fundamentals.
So what sort of returns could we be looking at?
What’s the dividend yield outlook?
Aberdeen has paid a 14.6p dividend every year since 2021 inclusive. The payouts have thrown off respective average annual yields of 6.1%, 7.7%, 8.2%, 10.3%, and 7.1%.
The changing returns, despite the steady payouts, result from changes in share price. Variations in the annual dividend can also cause the yield to change over time — up or down.
In this case, analysts forecast more of the same 14.6p payout each year for the next three years at least. On the current share price of £2.37, these would generate annual dividend returns of 6.2%.
That is double the present average of the FTSE 100 index to which Aberdeen has recently been promoted.
How does the dividend profile look?
£20,000 (the size of my holding in Aberdeen) would make £17,119 in dividends after 10 years and £107,861after 30 years.That marks the end of the standard investment cycle for long-term investors. This is characterised by first investments around the age of 20 and then early retirement options around 50.
By then, the holding’s total value (including the original £20,000 investment) would be £127,861. And that would pay an annual income from dividends alone of £7,927!
The figures are based on the forecast 6.1% as an average, and on dividend compounding being used.
Solid growth momentum?
A solid dividend is only as reliable as the growth engine that funds it, of course. A risk here for Aberdeen is a reduction in assets under management and administration (AUM) if market conditions become volatile enough to deter investors. Another is that the rising cost of living could prompt investors to close accounts.
Nevertheless, the firm’s restructuring, which it began in 2023, has delivered strong benefits over the past year especially. The plan broadly involved simplifying the firm, cutting costs, and increasing profitability.
Its 2025 results, released on 3 March 2026, showed profit before tax soaring 76% year on year to £442m. Adjusted capital generation grew 5% to £323m, and AUM climbed 9% to £556bn.
This year, the company forecasts adjusted operating profit of £300m at minimum and net capital generation of around £300m. Medium-term (to end-2028) capital generation is targeted to grow 5%–10% annually once this year’s goal is met.
So good has its performance been that 3 June saw the announcement that it will be promoted back to the top-tier FTSE 100 from 22 June.
My investment view
For me, Aberdeen combines a highly attractive income stream with strong, improving operational momentum. So I will be buying more of the shares on that basis very soon.
For the same reasons, I think these qualities make it a compelling prospect for long-term investors to consider.
And its high yield, steady dividend policy, and growing profitability provide a solid foundation for those future returns, in my view.
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Simon Watkins owns shares in Aberdeen.
This story originally appeared on Motley Fool
