GQG Partners Inc (ASX: GQG) is one of the most promising ASX dividend shares for passive income, in my opinion. Indeed, with a $5,000 investment, it could unlock $500 in dividends.
For readers who haven't heard of this business before, it describes itself as a global investment boutique headquartered in the United States. It's focused on actively managing share portfolios focused on four strategies: international shares, global shares, emerging markets shares, and US shares.
Why earnings growth looks likely
One of the first factors I want to see with an ASX dividend share is that its earnings are likely to rise. This can help boost the share price as well as fund higher dividend payments.
All of GQG's major funds have outperformed their respective benchmarks over the long term. Certainly, I think the investment style of GQG can mean its investment performance can continue to do well.
Fund inflows are helping boost its funds under management (FUM) which is a large boost for revenue and subsequently profit. A significant majority of its revenue comes from management fees rather than performance fees, so its profit can be much more consistent.
Passive income potential
The business has committed to paying 90% of its distributable earnings to investors each year.
With the company trading on a low price/earnings (p/e) ratio, it means that investors should be able to get a very good dividend yield.
Estimates on Commsec suggest the fund manager could pay an annual dividend per share of 14.1 cents in 2024. That translates into a forward dividend yield of 10.4%.
GQG's annual dividend could then grow to 15.3 cents per share in 2025, which would equate to a huge dividend yield of 11.3%.
Making $500 of dividends
That means that if we invested $5,000 into the ASX dividend share today, it would pay annual dividends of $520 in 2024.
In the following year, that increased payout could lead to receiving $565.
The company is paying its dividend quarterly, so these annual totals would be divided across four payments.
A combination of strong, growing dividends, and improving profits could help GQG shares deliver outperformance at their current valuation.
