Edison issues initiation on Aberdeen Diversified
Source: RNS
London, UK, 1 May 2019
Edison issues initiation on Aberdeen Diversified Income and Growth Trust (ADIG)
Aberdeen Diversified Income and Growth Trust (ADIG) follows a diversified multi-asset approach, aiming to generate attractive long-term income and capital returns. The managers aim to hold a genuinely diversified, global, multi-asset portfolio of investments with differing return drivers and risk characteristics, that should produce uncorrelated returns. Performance has been mixed since the appointment of Aberdeen Standard Investments (ASI) as manager in February 2017, but positions in longer-term, less liquid investments, typically only accessible to large, sophisticated investors, are steadily being built up, and the experienced investment team is confident that the Libor +5.5% pa target return can be achieved over the investment cycle. The FY18 total dividend was 1.17x covered and the board intends to increase the FY19 dividend by 2.3% to 5.36p, representing a 4.7% yield.
While many of its peers are ungeared, ADIG has moderate structural gearing, with a £60m 6.25% bond due in 2031. Since October 2018, ADIG's shares have moved from a premium to a 1.6% discount to ex-fair NAV, which compares with a one-year average 1.5% premium and a three-year average 2.8% discount. The trust's 4.6% historic dividend yield is the second highest in the peer group, well above the 2.5% average yield, and the dividend rate was increased in the first quarter of FY19.
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