Ashmore Group Plc's (LON:ASHM) investors are due to receive a payment of ￡0.121 per share on 6th of December. This makes the dividend yield 9.7%, which will augment investor returns quite nicely.

Check out our latest analysis for Ashmore Group

Estimates Indicate Ashmore Group's Could Struggle to Maintain Dividend Payments In The Future

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, the company's dividend was much higher than its earnings. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

Looking forward, earnings per share is forecast to fall by 22.8% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 155%, which could put the dividend under pressure if earnings don't start to improve.

Ashmore Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from ￡0.161 total annually to ￡0.169. Dividend payments have grown at less than 1% a year over this period. 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 Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Ashmore Group's earnings per share has shrunk at 12% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Ashmore Group's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Ashmore Group's payments, as there could be some issues with sustaining them into the future. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Ashmore Group that investors need to be conscious of moving forward. Is Ashmore Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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