It’s common to search out among the finest UK dividend shares on the FTSE 250. The smaller market caps imply it’s liable to extra excessive price fluctuations. This will result in inflated yields as the 2 metrics are inversely correlated.

Naturally, no one needs to put money into a high-yield dividend inventory simply to observe the share price plummet. So when evaluating UK shares for passive revenue, it’s essential to evaluate the place the price could be heading.

With an attention-grabbing 11.2% dividend yield, Ashmore Group (LSE: ASHM) stands out as one of many highest-paying shares on the index. However is that this a real dividend gold mine, or is the yield too good to be true? 

I took a better have a look at the corporate and assessed the professionals and cons of investing in it.

Excessive yield, reasonable worth

Ashmore Group is a specialist rising markets funding supervisor, overseeing billions in belongings throughout fastened revenue, equities and different investments. The corporate’s experience in growing markets has helped it carve out a distinct segment, whereas additionally exposing it to international financial volatility.

At round 11.2%, its yield is properly above the typical for FTSE 250 dividend shares. Nonetheless, that is partly on account of its falling share price, which has declined since early 2021.

Some issues have been raised by shareholders, together with outflows and declining belongings below administration (AUM). Nonetheless, the agency has maintained its dividend regardless of these challenges, elevating questions on its sustainability.

Earnings additionally suffered not too long ago, lacking expectations by 36% within the second half of 2024. That’s no small miss and naturally, a trigger for concern. Thankfully, issues appear to be enhancing, with earnings up 5.7% within the first half of 2025.

The shares appear pretty priced, with a reasonable price-to-earnings (P/E) ratio of 14.4 — down from 45 in early 2023.

What are the dangers?

The primary factor that worries me is the dividend sustainability. A excessive yield is engaging but it surely may also be a purple flag. With earnings below stress on account of declining AUM, some analysts query whether or not Ashmore’s dividend coverage is simply too beneficiant and susceptible to being minimize.

Including to this fear is the query of rising markets. With its efficiency intently tied to rising economies, it may endure excessive volatility on account of foreign money fluctuations, political instability or altering rates of interest.

And final however not least, share price efficiency has been lower than spectacular. The inventory has been on a downward development for a number of years, considerably underperforming the broader market. A declining share price can generally point out structural points inside an organization.

On the plus aspect

The double-digit yield is undeniably interesting for income-focused traders. It additionally has a monitor file of constant payouts and its robust steadiness sheet suggests it could actually proceed rewarding shareholders within the close to time period.

Regardless of asset outflows, the corporate has minimal debt and continues to be worthwhile. Its excessive working margins and price effectivity may assist maintain dividends even in tough market circumstances.

Its publicity to rising markets, whereas dangerous, additionally gives advantages. At instances, such markets have delivered larger long-term returns in comparison with developed economies. If capital flows into these areas get well, Ashmore’s belongings below administration may rebound, boosting earnings and share price efficiency.

Total, I feel Ashmore is a inventory value contemplating for dividends.