The ASX is known for its dividend shares. But as well as the more notable dividend stocks, there are other potential ideas that are currently flying under the radar.
Certainly, investors have likely heard of many of the biggest names like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Telstra Corporation Ltd (ASX: TLS).
But a business doesn't need to have a market capitalisation of over $40 billion to be an effective ASX dividend share.
Brokers have recently labelled these two relatively unknown names as buys. They could also pay large dividends in FY23.
GQG Partners Inc (ASX: GQG)
GQG is currently one of the largest fund managers on the ASX with a market capitalisation of $4.5 billion according to the ASX.
It offers a number of different investment funds for investors, such as US shares, dividend shares, and global shares.
One of the main differences with this fund manager is that a vast majority of its revenue comes from management fees, rather than performance fees. This means there's more consistency in the company's earnings.
Funds under management (FUM) play a large part in the company's earnings generation. In the month of October 2022, GQG saw FUM rise from US$79.2 billion to US$83.8 billion. In the three months to September 2022, the business saw net inflows of US$0.8 billion.
GQG looks to pay out approximately 90% of its quarterly distributable earnings, making it attractive as an ASX dividend share.
The broker Ord Minnett currently rates it as a buy, with a price target of $2.20 – that's 40% higher than where it is right now. The estimated FY23 dividend yield could be 5.4%.
EQT Holdings Ltd (ASX: EQT)
This business is more than 130 years old. It describes itself as a leading specialist trustee company, offering services like asset management, estate planning, philanthropic services, and responsible entity services for external fund managers.
FY22 saw ongoing growth for the business. Funds under management, administration, advice, and supervision (FUMAS) grew by 3.3% to $148.9 billion, revenue rose 10.4% to $111.5 million, and net profit after tax (NPAT) went up 12.5% to $24.2 million. The FY22 dividend also grew 6.6% to 97 cents per share.
It's currently in the process of buying Australian Executor Trustees for a total cash consideration of $135 million. This will add $5.4 billion of FUMAS, boost overall revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) by "more than a third", and is expected to be "earnings accretive".
The ASX dividend share is expecting to achieve synergies from a restructuring of its platform service business and additional investment revenue in relation to the trustee services business.
Ord Minnett also rates EQT as a buy, with a price target of $35. That implies a possible rise of more than 30%. EQT could pay a grossed-up dividend yield of 5.7% in FY23.
