This 10% ASX dividend stock is my pick for superior income in 2024

This share could pay huge income next year.

| More on:
Modern accountant woman in a light business suit in modern green office with documents and laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article is all about the ASX dividend stock I'd buy for extremely high passive income in 2024. My choice is GQG Partners Inc (ASX: GQG), a fund manager that's based in the US.

For readers that don't know this business, it's actually quite large – it has a market capitalisation of over $4 billion, according to the ASX.

It offers a number of different strategies for investors including 'international equity', 'global equity', 'emerging markets equity' and 'US equity'. It also offers portfolios focused on dividends.

How big is the dividend income yield going to be in 2024?

The business has a policy of paying out 90% of its distributable earnings as a dividend to investors. In other words, its dividend payout ratio target is 90%, but it will still retain a little of the profit for growth/the balance sheet.

Its quarterly dividend has increased each quarter in 2023 and the annual dividend is projected to grow again in 2024.

According to the forecast on Commsec, the company could pay a dividend per share of 14.9 cents, which would be a forward dividend yield of 10.4%. There are few ASX dividend stocks that are growing their dividends and expected to pay a yield of more than 10% in 2024.

How is the company able to pay such a good yield? It's because it is valued at such a low multiple of its earnings, which we can call the price/earnings (P/E) ratio.

Based on the Commsec projection for the dividend, we can work out that GQG shares are valued at less than 9 times FY24's distributable earnings.

Can the ASX dividend stock's dividend and earnings keep rising?

The projection on Commsec certainly implies so. The dividend per share is predicted to rise to 16.1 cents per share, which would be a dividend yield of 11.2%.

One of the biggest drivers of earnings for a fund manager is the funds under management (FUM) because that's what generates management fees – hardly any of the revenue comes from performance fees, despite GQG's strong investment performance with its funds.

Over the past five years, each of its main strategies had outperformed the respective benchmark by an average of at least 2% per annum.

In the first ten months of 2023, it has seen net inflows of $8.5 billion. That's a large amount of inflows considering there has been a lot of economic uncertainty. At 31 October 2023, the fund manager had US$103.9 billion of FUM, up from US$83.8 billion at 31 October 2022.

It's expanding geographically too, opening up to different markets including Australia and Canada.

In two years, I think its FUM could be materially higher than it is today, which can help the ASX 200 dividend stock's payout as well.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Happy dad watching tv with kids, symbolising passive income.
Dividend Investing

How I built $5,000 of passive income starting with $0

My intake of dividends is continuing to grow.

Read more »

A man raises his reading glasses in a look of surprise.
Dividend Investing

1 ASX dividend stock down 55% to buy right now

Analysts think that this beaten down stock could be a bit of a bargain for income investors.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Dividend Investing

Analysts say these ASX dividend shares are top buys

Here are a couple of options for income investors to consider buying right now.

Read more »

Accountant woman counting an Australian money and using calculator for calculating dividend yield.
Energy Shares

Is the 11.3% dividend yield on Woodside shares for real?

Are investors really in line for an 11.3% yield from this oil stock?

Read more »

Yellow rising arrow on a brick wall with a man on a ladder.
Dividend Investing

Owners of Brickworks shares haven't seen a dividend cut for 47 years!

This stock has been building its dividend for a long time.

Read more »

Money Wealth Coin on Shopping Cart and grow up as creative investment ideas.
Dividend Investing

If I invest $10,000 in Woolworths shares, how much dividend income will I receive in 2024?

The supermarket giant is due to report its 1H FY24 results and interim dividend tomorrow.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Healthcare Shares

What is the dividend growth rate of CSL stock?

CSL's dividends are worth more than what meets the eye.

Read more »

Hand with Australian dollar notes handing the money to another hand symbolising ex-dividend date.
Dividend Investing

Here's everything you need to know about the latest BHP dividend

How big is the latest dividend from the mining giant?

Read more »