FTSE 250 incumbent Ashmore Group (LSE:ASHM) has seen its shares climb by 4% today after it released full-year results for the period that ended 30 June 2022. I found the results impressive, despite headwinds in recent months. Is now the time to buy the shares for my holdings? Let’s take a closer look.
Investment manager
As a quick reminder, Ashmore is one of the leading investment managers in the world. It is a specialist value-oriented asset manager and focuses on emerging markets. As I write, it has over $60bn worth of assets under management with global exposure.
So what’s happening with Ashmore shares currently? Well, as I write, they’re trading for 203p. At this time last year, the stock was trading for 356p, which is a decline of 42% over a 12-month period. I’m not concerned by this share price drop — in fact, it could be an opportunity to buy cheap shares currently. Many UK shares have fallen due to macroeconomic headwinds as well as the tragic events in Ukraine recently.
A FTSE 250 stock with risks
The investment sector has suffered at the hands of the economic volatility in recent months caused by soaring inflation. This has also caused a cost-of-living crisis, too. Due to these issues, many investors have been withdrawing funds and this has been something affecting Ashmore as well. This could have an impact on performance, investor sentiment, and returns.
Next, I view Ashmore as a stock that could boost my passive income stream (more on that later). However, I am aware that dividends are never guaranteed. They can be cancelled at the discretion of the business to conserve cash. This can happen when the economy is volatile, like now. This is a development I will keep an eye on.
Impressive results and my verdict
Let’s drill down into Ashmore’s results then. It reported that total assets under management totalled $64bn. Total outflows of $13.5bn were higher than anticipated but it pointed towards inflation and geopolitical issues as the reason behind this. Revenue dropped by 13% compared to last year. On a positive note, it managed to reduce operating costs by 7%. On a positive note, it managed to strengthen its balance sheet with close to £800m worth of capital resources available, including £542m worth of cash. The best part of these results for me were the fact it was able to maintain its dividend of 16.9p per share.
So what does that all mean for me as a potential investor like me? Well, I anticipated that operations, outflows, and revenue would be adversely affected. However, I also thought Ashmore’s dividend would be cut. I was wrong, and in this case glad I’ve been proven wrong. Ashmore has shown resilience in a tough time and it seems it has plenty of cash to weather current stormy waters and continue to reward shareholders. A dividend yield of over 8% is enticing. This is nearly four times the FTSE 250 average of 1.9%.
In conclusion, I believe Ashmore shares could be a good option to boost my passive income stream. It has also shown good levels of toughness in the face of a volatile economic picture. An enticing dividend yield, and plenty of cash to back this up, helps me build my investment case.
