Abrdn Asian Income (AAIF ) has increased its dividend payout for 2023 by 17.5% as its focus on high-yielding companies pay off.

The £334m fund increased its fourth interim dividend for the year ending 31 December 2023 to 4.25p per share, up from 3.1p in the same period a year earlier.

This takes the total dividend to 2023 to 11.75p, a 17.5% increased on 2022 when shareholders enjoyed a pay-out of 10p per share. It also marks the fifth consecutive year of annual dividend increases, keeping it on track to become an Association of Investment Companies’ ‘next generation dividend hero’.

The distribution is equal to a dividend yield of 5.8% based on the closing share price of 201p on 12 January and is expected to be fully covered by earnings.

Ian Cadby, chair of the trust, said fund managers Flavia Cheong, Yoojeong, and Christina Woon, had focused on ‘high-yielding companies throughout the Asia region with strong fundamentals’ and as a result ‘we have seen growth in dividend receipts flowing into the portfolio’.

‘The board is very aware of the important of dividends to shareholders, as well as providing an above-average yield and ensuring that those dividends grow over time,’ he said.

‘We are therefore pleased to be announcing an above-inflationary increase in dividend with an above-average yield.’

The trust currently trades on a 13.1% discount after shares slid 7% over the past year, while the net asset value (NAV) sank 5.8%, as the faltering economic recovery in China weighed on Asia Pacific returns.

This has led the trio of managers to cut their exposure to China to just 8.1% as of the end of November, far below the 27.5% China exposure in the MSCI Asia Pacific ex Japan benchmark.

The largest weighting is currently to Taiwan at 20.4% followed by Singapore at 20.3%. Taiwan has been one of the fund’s strongest performers of late thanks to ‘gains by technology heavyweights, amid positive third quarter results and guidance’, said the managers in their latest factsheet.

They said that ‘Singapore lagged the broader Asia Pacific region due to weakness in the financials sector that comprises almost half of the domestic benchmark index’.