£500 buys 307 shares in this 10.16% dividend yield stock!
Even with UK shares trading near all-time highs, there are still plenty of stocks offering impressive dividend yields. Among these is Ashmore Group (LSE:ASHM), which currently has one of the highest payouts in the FTSE 250, at 10.2%.
Normally, double-digit yields are a warning sign to stay away. Yet this asset management enterprise has nonetheless maintained its impressive shareholder payouts for over half a decade, so far. And looking at the group’s latest results, this pattern looks like it’s set to continue in 2026
So should investors consider picking up 307 shares for £500 right now to tap into this seemingly lucrative passive income opportunity?
Emerging market recovery
As a quick crash course, Ashmoreâs an investment management group specialising in emerging markets. With Covid and then inflation having ravaged emerging economies, this stock market sector has had a rough couple of years. However, more recently, the tide seems to have turned.
Looking at the MSCI Emerging Market Index, these stocks have been steadily recovering since late 2022. But that recoveryâs gone into overdrive in 2025, rising by 26.3% since the start of the year. And that’s before accounting for dividends. By comparison, the FTSE 100, which is also having a good year, is only up around 17%.
This market momentum bodes well for Ashmore’s business. In its latest quarterly update ending in September, its investment portfolio increased by $1.4bn. And at the same time, rising investor interest has attracted fresh capital, offsetting the fund outflow challenges Ashmore has been enduring, growing its assets under management to $48.7bn.
Yet, despite this operating and financial momentum, its share price continues to lag the MSCI index, driving the dividend yield into double-digit territory. So why is investor sentiment surrounding Ashmore still so weak despite the business getting stronger?
Investigating the yield
As previously mentioned, Ashmore’s client base has and continues to withdraw their money. In fact, looking back to September 2022, which was the start of the emerging market sector recovery, Ashmore’s assets under management were actually higher at $56bn.
Even with the business achieving strong investment returns for clients, clients continue to cycle their funds out of Ashmore and into US tech or alternative assets like gold. And with fewer assets under management, the firm’s revenue from management fees has suffered.
The good news is that client outflows are slowing. The bad news is that dividends are exceeding profits.
As such, managementâs been selling off parts of its investment portfolio to pay dividends. Needless to say, in the long term, that’s unsustainable. And while leadership has found ways to cut costs, it’s not been enough to offset the loss of fee income.
Where does that leave investors?
The strong performance of emerging market investments serves as a handy tailwind for Ashmore’s business.
Beyond growing the investment portfolio, displaying strong returns is a good way to attract and retain new investor capital. And with the US stock market starting to wobble, the company could soon enjoy a capital allocation shift back to emerging markets.
However, the timing of this remains a mystery. And if investor interest continues to prove elusive, a dividend cut may be inevitable. In other words, this is a high-risk, high-reward dividend stock. And personally, I think there are more attractive opportunities to explore elsewhere.
The post £500 buys 307 shares in this 10.16% dividend yield stock! appeared first on The Motley Fool UK.
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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
