Despite enduring fears over macroeconomic turbulence in emerging regions, Ashmore Group (LSE: ASHM) has remained a popular pick with dividend chasers thanks to its market-mashing yields.
The financial giant was able to ride out years of earnings volatility before finally succumbing to the pressure of vast outflows in the last fiscal year. Indeed, Ashmore elected to cut the dividend to 12.1p per share in the period to June 2016 from 16.65p in the prior year.
And despite expectations of fresh bottom-line pressure in the current year — an 11% earnings decline is currently anticipated — Ashmore is expected to get shareholder rewards chugging higher with a 17p payout. This projection yields a very-decent 4.6%, taking the FTSE 100 average of 3.5% to bits.
Big questions remain over the health of these developing markets, but investors will be encouraged by Ashmore’s latest financials released today. These showed assets under management rising 4% quarter-on-quarter during July-September, to $54.6bn.
Ashmore chief executive Mark Coombs commented that “the ongoing recovery in emerging markets asset prices through 2016 and the attractive returns on offer across a diverse range of investment themes are causing investors to reconsider their underweight positions.” The company has been battered by massive net outflows in recent times.
However, one could argue that Ashmore’s share price rise to 27-month peaks leaves it looking a tad top-heavy at present, the firm dealing on a forward P/E rating of 21.4 times.
Should investor appetite for its far-flung regions sour again and outflows pick up — a very possible scenario, in my opinion — then investors should expect another hefty stock value fall at Ashmore.
Money master
Sub-prime lender Provident Financial (LSE: PFG) released reassuring trading details in Friday business.
Provident announced that “the group performed well through the third quarter of the year,” adding that “credit quality in all three businesses is very sound and reinforces confidence in delivering good results for 2016 as a whole.”
At its Vanquis Bank division, Provident saw customer numbers leap 13% between July and September, while receivables edged 7% higher. Meanwhile, customer numbers at its CCD division remained stable from June, Provident noting that “demand and customer confidence in home credit have remained robust.”
All is not completely rosy at Provident however, the company advising of regulatory concerns as CCD awaits full FCA authorisation to trade, and the regulator continues its study into the UK credit card industry.
Still, the City is convinced Provident has what it takes to keep earnings rising, and advances of 13% and 7% are pencilled-in for 2016 and 2017 respectively.
Subsequent P/E ratios of 17.7 times and 16.6 times may edge above the FTSE 100 mean of 15 times, but expected dividends of 129.6p per share for 2016 and 140.1p for next year compensate for this. These figures yield 4.3% and 4.6%.
Should Provident avoid excessive FCA action, as is widely expected, the lender could prove to be a very lucrative long-term selection for investors.
