A stock market crash is supposed to be bad for fund managers, as panicky investors pull their money and assets under management plunge. If that’s the case, nobody told Ashmore Group (LSE: ASHM).

The FTSE 250 emerging market asset manager’s stock is up a whopping 8.32% this morning, after its statement showed assets under management up an impressive $1.9bn in the three months to 30 September. Ashmore has obviously benefited from the strong recovery from the stock market crash. Investment performance boosted assets by $2.7bn, more than offsetting $800m of net customer outflows.

Emerging market dividend hero

Ashmore said its active investment processes delivered a “strong outperformance” for the quarter as markets continued to recover from oversold levels. CEO Mark Coombs warned of near-term macro risks, primarily Covid-19 and the US election. However, he said these could provide “good investment opportunities for Ashmore’s active processes to exploit.”

Ashmore specialises in investing in emerging markets, which seem to be recovering faster from the pandemic. The stock could be a good way to play Asia and beyond, but with the security of a London listing.

You have a stock market crash buying opportunity here, because the Ashmore share price still trades around 25% lower than a year ago. Currently, you can pick up its stock at a valuation of 13.3 times earnings.

Ashmore is also a highly attractive income stock, currently yielding 4.6% with cover of 2.2. While emerging markets may be bumpy in future, they may have more exciting prospects than ageing, debt-burdened developed economies.

Another stock market crash opportunity

FTSE 100 educational publisher Pearson (LSE: PSON) talked up its “improving trend in Q3” in today’s trading statement, but the market isn’t impressed. The Pearson share price fell almost 2% after digesting a 14% drop in group sales. Test centre and school closures hit its Global Assessment and International division, while its North American Courseware operation also saw declines.

On the plus side, sales at its Global Online Learning operation grew 14%, so at least Pearson is benefiting from the wider digital shift.

The Pearson share price has more than halved over the last five years, and the pandemic obviously cannot be blamed for that. Its US educational business has suffered by the shift from print to e-books. However, the retuned business has been getting back on track, and its stock is actually up 20% over the last six months.

If you’re looking for a stock market crash bargains, Pearson could offer an opportunity. When we finally get a coronavirus vaccine, it could build on its recent transformation. It currently trades at 9.9 times earnings, but brace yourself for a bumpy ride.

Pearson’s earnings look set to drop 52% this year, then rebound 48% in 2021. You need to take a long-term view.

The post Stock market crash opportunities! I’d buy these UK dividend growth shares today appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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.

Ashmore Group

Share price sentiment matters if you are investing in asset management companies such as emerging markets specialist Ashmore Group (LSE:ASHM), as they have direct exposure to stock market fortunes. The FTSE 250 group enjoyed a great start to 2019 as global markets started the year brightly. The Ashmore share price is still up more than 30% measured over 12 months, and despite a sharp dip in recent weeks, as the US-China trade war knocked sentiment.

The stock is up around 1.5% this morning as Ashmore posted a 24% rise in assets under management to $91.8bn, welcome news after July’s figures showed Q4 assets grew less than expected. Growth was driven by broad-based net inflows of $10.7bn while a positive investment performance contributed $6.9bn. Adjusted net revenues grew 11%, driven by a 17% increase in net management fees, while profit before tax jumped 15% year-on-year to £219.9m.

CEO Mark Coombs said the emerging markets backdrop “remains relatively healthy, with economic indicators such as GDP growth and inflation continuing to trend favourably,” despite the “confrontational” US trade policy.

Ashmore looks well-positioned to benefit, although some investors may be wary of asset managers generally right now, given current uncertainties. Today, management held the final dividend at 12.1p, as it looks to re-establish cover at 1.5 times statutory earnings, which leaves the forecast yield at a solid 3.7%.

Emerging markets have been the best performers of 2019, with China up 30% and Russia 24% year-to-date, so there is a chance it could struggle when the investment cycle favours other regions. The Ashmore share price does look a little expensive today, trading at a forecast valuation of 19.1 times earnings, although earnings are forecast to rise a healthy 25% next year.

Whether you think it’s a buy at today’s price will partly depend on where you see global stock markets moving next.

Schroders

FTSE 100 asset and wealth manager Schroders (LSE: SDR) has had a bumpier time of it, the share price down 5% over the last year and trading just 14% higher than five years ago.

In contrast to Ashmore, Schroders has been suffering net outflows, recently reporting that clients withdrew £1.2bn in the first half of the year, as the risk-off environment hit its intermediary division particularly hard. Pre-tax profits fell 14.28% to £340.4m in the six months to 30 June, although analysts expected worse, and despite the issues, record high assets under management of £444.4bn and a “strong” pipeline of new inflows bode well.

Schroders covers a far broader range of markets, both developing and emerging, but unlike Ashmore, that leaves it directly exposed to any slowdown in the US, Brexit-addled UK and Europe. However, if you think recent negativity has been overdone, you might be tempted to jump in at today’s reasonable forward valuation of exactly 14 times earnings.

The forecast dividend is a healthy 4%, with cover of 1.7, and it has a decent record of raising the payout every year.

The post Got £2,000 to invest? I’d consider popping these 2 growth and income stocks into an ISA appeared first on The Twelfth Magpie.

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Harvey Jones 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.

Flowing in

This was made up of net inflows of $5bn and positive investment performance of $3.6bn, so Ashmore is shining on both fronts. The £3.36bn FTSE 250 group said client demand remains strong across its broad spread of investment themes, with healthy institutional inflows from existing clients.

CEO Mark Coombs said client activity levels picked up through the quarter following a slight pause at the end of 2018: “This reflects a number of ongoing positive factors including investors’ light positioning in emerging markets.” 

Its clients were also finding value after a tricky 2018, while stepping back from developing markets due to “slowing growth and political challenges.” This has left Ashmore well-positioned for continued growth, he concluded.

Emerging opportunity

Fund managers are effectively a geared play on the stock market or, in Ashmore’s case, emerging stocks. In 2017, the emerging market MSCI index surged 37.28%, and Ashmore’s share price surged too. Last year, the index fell 14.57%, with a predictable consequences. The index is up 9.92% year-to-date and Ashmore is riding higher. You get the picture.

The key is to avoid buying at the peak of the cycle when the share price is excessively valued. Possibly we could be there, with the group trading at 18.5 times forecast earnings. Recent growth has driven down the yield, now a forecast 3.7%, with cover of 1.4. Personally, I would prefer to buy Ashmore when it’s down, rather than up. Roland Head got his timing right, tipping the stock a couple of months ago. It may fit better on your watchlist than in your portfolio right now.

Cyclical stock

Fellow FTSE 250 company Halfords (LSE: HFD) has caught my attention due to its high yield and low valuation. The motoring and cycling product and service retailer now offers a forecast income stream of 7.4%, covered 1.4 times by earnings, yet trades at just 9.8 times forward earnings.

The stock has had a rotten year, falling more than 33% in the past 12 months. That’s Halfords’ punishment for delivering its fair share of disappointing news. Last May, investors had to absorb a 5% drop in underlying pre-tax profits to £71.6m, albeit largely due to £25m currency headwinds.

Motoring on

In January, it reported a 1.7% fall in like-for-like group revenues for the 14 weeks to 4 January. That was due to mild weather and weaker consumer confidence, which knocked discretionary sales of pricier adult bikes, although cycle accessories and children’s cycling held firm.

Some investors will be tempted by the group’s strong cash flows and healthy balance sheet, but you must set that against weak consumer confidence. Forecast earnings growth looks flat this financial year and only  improve slightly next, yet many of the group’s problems are surely locked into today’s dirt cheap share price. Throw in low levels of debt and Halfords could make a tempting contrarian buy for income seekers.

The post Got £2k to spend? I’d consider buying these 2 FTSE 250 stocks today appeared first on The Twelfth Magpie.

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Harvey Jones 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.

Emerging fears

The strong dollar is at the heart of it. Emerging market countries have loaded up on cheap dollar-denominated debt over the last decade but now it is proving difficult to service, as interest rates rise and QE is reined-in.

As a specialist emerging markets asset manager, FTSE 250 listed Ashmore Group (LSE: ASHM) should be in the firing line, but today’s trading update for the first quarter to 30 September is positive. It posted net inflows of $1.9bn as clients looked to take advantage of recent price volatility, a trend management expects to continue. 

Flowing in

Ashmore grew assets under management by a respectable 3.4% as $2.5bn of inflows lifted its total to $76.bn. It was further boosted by positive market movements of $300m and a similar amount of acquired assets.

CEO Mark Coombs said current uncertainty is leading to mis-pricing, which is throwing up buying opportunities. “We anticipate there will be more opportunities to buy attractively-valued assets and to embed long-term value into portfolios.” We like that kind of fighting talk at the Fool.

However

One concern is that the valuation doesn’t reflect current uncertainties, as it trades at 16.4 times forecast earnings. Also, share price performance does not reflect its buoyancy, with the stock trading 14% lower than five years ago. It does yield 4.8%, though, with cover of 1.3. My Foolish colleague Kevin Godbold admires its dividend potential. I just wish Ashmore was a mis-pricing opportunity too.

Fund manager Mark Mobius is the doyenne of emerging markets investing, and many still link his name with his trail-blazing investment trust Templeton Emerging Markets (LSE: TEM), which he helmed for 26 years before his recent replacement by Chetan Sehgal, who may be having a baptism of fire.

Interesting times

The fund is up just 22% measured over five years but still beat the wider investment trust global emerging markets sector, up 14% in that time. Over three years it is up 52%, against 29% for its sector. The new manager has had a rough ride, though, with the trust trading 14.5% lower than 12 months ago, worse performance than the sectoral dip of 11.2%.

The £1.67bn giant, launched in 1989, contains big and familiar tech names, including Chinese behemoths Alibaba Group and Tencent Holdings, Samsung Electronics and Taiwan Semiconductor Manufacturing, Indian bank ICICI and Unilever. Tencent has just suffered the biggest market value loss in history, a world record $220bn, hitting the trust’s performance.

Lonely are the brave

A quarter of the fund is invested across Asia-Pacific, with meaty exposure to South Korea and Taiwan, then a broad spread across Russia, Brazil, South Africa, India and Thailand. This gives you a good global reach. It is also trading at a discount of 11.9% to net asset value. Didn’t I say that you need to be brave, though?

The post This FTSE 250 dividend stock and investment trust bargain may help you play the emerging markets crisis appeared first on The Twelfth Magpie.

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harveyj has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.

Back in 2005, I used to believe that the firm’s operations around the world made it a decent play on emerging markets. Its trading in Asia, the Middle East, North Africa and Latin America seemed like an ideal way to ride the prosperity that could develop in those regions over the years. The risk was always balanced, I thought then, allied by the company’s strong presence in the developed economies of Europe and North America.

A drag on investor returns

After holding the stock for a couple of years, I realised it was going nowhere and sold out. The problem as I see it with HSBC Holdings is that banking operations are highly cyclical. That leads to the shares being buffeted around by the ups and downs of the macro-economy and by changing investor sentiment. I don’t believe big banks such as HSBC will ever shoot the lights out with investor returns because progress on earnings always seems to lead to the stock market tempering share-price gains by reducing the valuation.

HSBC’s fat dividend is no consolation either. I could collect it for years only to see all my gains wiped out in capital losses when the share price plunges into the next cyclical down-leg. If that happens, the firm’s profits and the dividend could be toast. With an out-and-out cyclical outfit such as HSBC, I think that whole down-leg scenario is an accident just waiting to happen. So I’d forget all about HSBC now and go for a firm in the wider financial sector, such as Ashmore Group (LSE: ASHM).

Today’s full-year results from the specialist emerging markets asset manager revealed that net revenue increased just over 7% compared to last year. Net cash from operations moved just over 29% higher and diluted earnings per share eased by around 10%. The directors held the total dividend for the year at last year’s level.

A positive outlook

The company saw “broad-based” growth in assets under management (AuM), up 26% year-on-year to $73.9bn, and said in the report that its clients have enjoyed decent returns because of Ashmore’s “consistent active investment approach.” Some 73% of AuM outperformed their benchmarks over one year, 94% over three years and 89% over five years. If the company can keep delivering for its clients like this, I reckon the firm’s future looks bright.

Chief executive Mark Coombs explained in the report that asset prices were “more volatile” in the final quarter of the trading year. But he puts that down to the “nervousness about a small number of emerging countries with particular issues such as Turkey.” He thinks the market extended those concerns “across the broad and highly diverse Emerging Markets universe of more than 70 countries.” 

However, in that situation, he sees opportunity for investors to take advantage of the market “mispricing.”

The outlook remains positive and I think Ashmore’s dividend, running around 4.7%, is attractive. I’d rather take my chances with this firm rather than with HSBC Holdings.

The post Why I’d forget the HSBC share price and go for this big dividend financial firm instead appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.

For many investors the prospect of declining consumer spending power as we move through 2018 makes Marston’s (LSE: MARS) a gamble too far.

Much-publicised restaurant shutterings by a string of dining chains like Byron, Chimichanga and Jamie’s Italian underline the pressure on cash-strapped Britons’ wallets as inflation still outpaces wage growth, and economic and political uncertainty also means more of us are electing to stay indoors. The intensely competitive landscape hasn’t exactly helped revenues across these establishments either.

Reflecting the toughening trading landscape Marston’s has seen its share price decline 25% over the past 12 months. However, I believe this weakness represents a great buying opportunity for long-term investors.

A tasty treat

You see, the FTSE 250 company has a long track record of outperforming its peers, and its plans to keep expanding its pub estate, with 15 pub restaurants and six lodges in the current fiscal period alone, should build a platform for solid top-line progression now and in the years ahead.

Accounting for the impact of difficult market conditions and a rising cost base, City analysts expect Marston’s to record a fractional earnings improvement in the 12 months to September 2018.

This is still expected to lay the base for extra dividend progression, and so last year’s 7.5p per share reward is anticipated to rise to 7.7p in the present period. As a consequence the yields stands at a colossal 7.3%.

And with profits growth expected to improve to 5% in fiscal 2019, the dividend is expected to swell to 7.9p too. The yield edges to 7.5% as a result.

Of course Marston’s is not without its share of risk. But I believe a forward P/E ratio of 7.4 times is more than reflective of this.

More monster yields

Share selectors on the hunt for monster yields should also pay Ashmore Group (LSE: ASHM) some attention today.

The emerging markets investment manager has kept the dividend locked at 16.65p per share for the past three years, but it is expected to finally get payouts marching higher again from the current fiscal period.

Despite a 16% profits slide being forecast by City brokers for the year to June 2018, Ashmore is expected to lift the dividend to 16.9p, meaning the yield registers at an excellent 4.4%.

What’s more, helped by an anticipated 9% earnings recovery in fiscal 2019, the dividend is expected to rise again to 17.4p. The yield subsequently edges to a juicy 4.5%.

Now Ashmore might be a tad expensive on paper, the firm rocking up on a forward P/E ratio of 18.6 times. But in my opinion at least, the FTSE 250 firm’s recent record of beating Square Mile forecasts makes it an attractive destination regardless. Ashmore saw assets under management jump 18% in July-December, to $69.5m, surpassing City expectations.

Besides, the strong outlook for its developing markets, coupled with predictions of activity-boosting volatility in financial markets in 2018 and beyond, makes it worthy of such a high rating.

The post Can you afford to miss this brilliant 7% yielder? appeared first on The Twelfth Magpie.

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Royston Wild 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.

However, despite this impressive performance, pre-tax profit declined to £99m for the six-month period, down from the year-ago figure of £121.5m due to a fall in seed capital gains and foreign exchange movements.

Commenting on the performance, CEO Mark Coombs said: “As Ashmore has generated attractive returns for clients over the past year, leading to strong inflows, it has also delivered positive operating leverage for shareholders, with growth in operating revenues and a reduction in adjusted operating costs leading to an increase in the adjusted EBITDA margin from 66% to 67%.” 

Out of Ashmore’s control

Despite Coombs’ optimism, I’m not as positive on the outlook for Ashmore as its CEO. Over the past five years, the company has struggled to win over investors. Even though the firm manages some of the world’s best performing emerging market investment funds, investors have been wary of its offering due to the underperformance of emerging markets in general when compared to developed equities. 

What’s more, the entire active management investment model is under threat around the world as investors wake up to the fact that excessive fees can cripple investment performance. Low-cost passive investment funds are replacing these instruments instead. 

This trend can be seen clearly in Ashmore’s earnings and sales. Over the past five years, revenue has declined by around 5% per annum as net profit has stagnated thanks to cost-cutting efforts. These problems have weighed on both the company’s shares and dividend. While the shares currently support a dividend yield of 4.1%, over the past five years the payout has hardly budged, and City analysts do not expect this to change any time soon. Also, the stock looks relatively expensive trading at a forward P/E of 19.2. 

A better dividend 

Considering the above, I believe that online clothing retailer N Brown (LSE: BWNG) might be a better buy. Unlike Ashmore, shares in N Brown are cheap, trading at a forward P/E of only 8.7 and the stock supports a market-beating dividend yield of 7.1%. That being said, the stock is cheap for a reason. 

At the end of January, the firm announced that its gross margin forecast for the full year would be below expectations as it spends heavily on promotions to drive sales. These promotions will crimp profit margins, but they are already having a positive impact on revenue. 

For the third quarter, overall sales grew by 3.2%. And for the year, analysts are not expecting a terrible performance from the firm. A net profit of £62m has been pencilled in, which is below 2012’s record figure of £81m, but above 2017’s £44.3m. It looks as if the market is ignoring this fact, and N Brown’s low valuation leaves plenty of scope for a re-rating higher. 

With this being the case, I believe that the company can meet its current dividend obligations, which makes it a highly attractive income and value play for investors.

The post One dividend stock I’d sell to buy this unloved 7% yielder appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

The stock was dealing just 0.5% higher at pixel time. But such a dull response is hardly a surprise given the ‘wait and see’ approach investors are taking following the frantic buying and selling activity of recent sessions.

In its bubbly release Grainger — the country’s largest listed private landlord — advised that it has “seen good demand for our rental homes and strong rental growth” during the four months ending January. Like-for-like rental growth was up 4.1% in the period, improving from expansion of 3.4% a year earlier.

And on its private rental sector (or PRS) homes, an increasingly-important segment for the Newcastle business, like-for-like rental growth stood at 3% during October-January versus 2.8% a year earlier. Grainger noted “continued strong demand for our rental offering” here in the period.

Elsewhere, residential sales for the four months ended January were stable year-on-year at £29m, it said.

Stunning dividend growth

The FTSE 250 firm has raised dividends at an impressive rate in recent times, even though reliable earnings expansion has remained elusive (indeed, dividends have more than doubled during the past five years). City brokers do not expect either trend to cease just yet either.

In the 12 months to September 2018 a 45% earnings improvement is forecast. And this is expected to underpin a 5.3p per share dividend, up from 4.86p last year.

And despite predictions of a 5% earnings reversal in fiscal 2019, Grainger is still predicted to supercharge the payout to 6.3p. And so a decent-if-unspectacular yield of 1.9% right now leaps to 2.2% for next year. I believe the strong demand for its homes should keep on driving dividends skywards too.

Emerging market master

I reckon now could be a sage time to pile into Ashmore Group (LSE: ASHM) as well. The business is due to release first-half financials tomorrow (Thursday, February 8), and this could lead to a fresh flurry of buying activity.

Last time around Ashmore impressed with news in January that assets under management improved by $4.5bn in the three months ended December, to $69.5bn, thanks to net inflows of $3.6bn and positive investment performance of $900m. The result smashed past broker expectations and reassuringly, sales growth was delivered from “a broad range of clients.”

And the FTSE 250 business advised that more is to come, commenting: “Our 2018 outlook is for another year of outperformance across the range of emerging markets asset classes.” This doesn’t shock me as returns from assets in these far-flung regions continue to outperform.

Just like Grainger, Ashmore may not fit the bill for many growth investors, despite its bright long-term outlook. Sustained profits expansion is expected to remain elusive for some time yet, the business predicted to print a 20% bottom line decline in the year to June 2018. Things are expected to pick up from next year though, a 13% earnings improvement being forecast for fiscal 2019.

However, income chasers may well want to invest in the asset manager given the delicious dividend yields on offer.

The 16.65p per share reward forked out over the past few years is finally expected to rise in the present period, to 17p, meaning a chunky yield of 4.1%. And the dial rises to 4.2% for fiscal 2019 thanks to an expected 17.4p dividend.

The post 2 top dividend stocks I’d buy right now appeared first on The Twelfth Magpie.

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Royston Wild 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.

The firm reported a year-on-year total increase in sales of 13.6% for the first half of its trading year to 30 December, of which total like-for-like sales are 6% higher. That kind of progress over the past six months doesn’t sound to me like a business sinking in some kind of death spiral as many fear could be the way of traditional retailers.

Emerging growth and market share gains

Chairman Andy Harrison was upbeat, saying: “This performance is driving our continued market share gains. We are now up to 169 superstores having successfully opened five in the quarter.”

Expansion rolls on unfettered, and digging into the figures reveals promising growth of almost 37% in the first half for online sales, fuelled by the company’s acquisition of Worldstores a little over a year ago. Online sales have reached 16% of total sales and 18.5% if you include reserve-and-collect customer activity. Mr Harrison said: “We are well on the way to becoming a genuine multi-channel retailer,” and I reckon emerging fast growth within an established set-up such as Dunelm can be an attractive situation.

However, although profit margins were maintained in the first half, Dunelm expects margins to weaken because online Worldstore sales have been less profitable and greater sales were stimulated by seasonal and end-of-season reductions. Maybe this news on margins is causing today’s share price weakness. Yet despite a change in the margin mix, the directors expect profit growth for the full year. Meanwhile, at today’s share price around 675p we can pick up Dunelm shares on a forward price-to-earnings (P/E) ratio below 13 and a forward dividend yield close to 4.4%, which strikes me as reasonable value for what looks like a growing enterprise.

Meanwhile, emerging markets asset manager Ashmore Group (LSE: ASHM) released its second quarter assets under management (AuM) statement this morning, revealing a decent performance over the period to 31 December. AuM lifted $4.5bn due to inflows from investors of $3.6bn and a positive investment performance of $0.9m. Things are moving in the right direction.

Emerging markets are on the rise

Chief executive Mark Coombs reckons that investors are being encouraged to invest in the firm’s funds because emerging market assets have delivered “strong absolute and relative” performance over the past two years. He said competitive currencies have been driving exports leading to an acceleration in economic growth in emerging markets. Looking forward, he said: “The next phase of the cycle should see institutional flows stimulating domestic demand and so provide for continued attractive returns, particularly from local currency-denominated assets including equities.”

Such views enable the firm to offer a positive outlook statement and Ashmore expects another year of outperformance in emerging markets during 2018. We can participate by picking up some of the firm’s shares on a forward P/E ratio a little over 19 for the year to June 2019 and the current share price near 432p also throws up a forward dividend yield around 4%. If emerging markets continue to do well as expected, we could see further progress with the share price and a valuation maintained at these levels.

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Kevin Godbold 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.

While OPEC nations, along with Russia, appear to be committed to keeping a lid on their own oil production, it is the steady ramping up in crude output from countries outside the bloc that threatens to keep Brent values beaten down. And the massive investment major producing nations like the US, Canada and Brazil are throwing into their domestic drilling operations suggests that the current supply glut looks likely to persist.

So while the City expects BP’s earnings to explode to 27.9 US cents per share in 2017 from 0.61 cents last year, and again to 37 cents in 2018, I’m afraid I am not so convinced. And the company’s conventionally-high forward P/E ratio of 23.4 times provides another incentive not to invest, in my opinion.

But while the oil giant’s 6% dividend yield may draw dividend hunters in their droves, I would suggest these investors instead check out a FTSE 250 beauty with which to get their income fix: Ashmore Group (LSE: ASHM).

AUMs continue to boom

The financial services giant announced on Friday that assets under management came in at $65bn at the end of September, blasting through broker projections and soaring from $58.7bn three months earlier.

The uptick was thanks to a combination of positive investment performance of $2.3bn and net inflows of $4.3bn, the firm said.

Commenting on the results, chief executive Mark Coombs noted: “Investors are increasingly focusing on emerging markets and it is encouraging to see strong inflows this quarter.” Ashmore’s head honcho added that the company is well positioned to help investors “address their underweight allocations” to these far-flung destinations.

In another encouraging proclamation, Coombs said: “Emerging markets are continuing to outperform as we would expect at this point in the cycle, with perceived challenges such as rising US interest rates having been anticipated and priced-in.”

The news sent Ashmore to its most expensive since January 2014 above 390p per share.

Expect forecast revisions

The fall in redemptions and improvement in investor demand (net inflows came in at their highest for four years in the last quarter) continues to accelerate over at Ashmore, and this is likely to see the City’s army of analysts revise up their earnings forecasts in the weeks and months ahead.

Indeed, I expect the current 23% bottom-line dip forecast for the 12 months ending June 2018 to look alarmingly out of date by the time the asset manager actually reports just under a year from now. And as such I would consider Ashmore to be a sage stock selection right now despite its slightly-expensive forward P/E ratio of 19.5 times.

Dividend investors should pay particular attention to Ashmore, too. It is expected to lift the dividend to 17p per share from 16.65p in recent years, resulting in a hunky 4.5% yield. And I expect rising appetite for emerging markets to result in increasingly-large payouts in the near term and further out.

The post Why I’d sell BP plc to buy this dividend darling appeared first on The Twelfth Magpie.

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• Oil prices are falling. So why am I still bullish on BP shares?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended BP. 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.