Ashmore Group's (LON:ASHM) Dividend Will Be UK£0.12

By
Simply Wall St
Published
September 10, 2021
LSE:ASHM
Source: Shutterstock

Ashmore Group PLC's (LON:ASHM) investors are due to receive a payment of UK£0.12 per share on 10th of December. This means the annual payment is 4.7% of the current stock price, which is above the average for the industry.

See our latest analysis for Ashmore Group

Ashmore Group's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Ashmore Group was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Looking forward, earnings per share is forecast to fall by 34.0% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 71%, which we are pretty comfortable with and we think is feasible on an earnings basis.

historic-dividend
LSE:ASHM Historic Dividend September 11th 2021

Ashmore Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2011, the first annual payment was UK£0.13, compared to the most recent full-year payment of UK£0.17. This implies that the company grew its distributions at a yearly rate of about 2.7% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Ashmore Group has impressed us by growing EPS at 14% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On Ashmore Group's Dividend

Overall, we think Ashmore Group is a solid choice as a dividend stock, even though the dividend wasn't raised this year. However, lack of cash flows makes us wary of the potential for cuts in the dividend's future, even though the dividend is generally looking okay. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Ashmore Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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