The GQG Partners Inc (ASX: GQG) share price has gone up 30% in 2024 and it has risen more than 60% in the last four months. Despite that, the ASX All Ordinaries (ASX: XAO) stock is still projected to pay a large dividend yield.
This business is a fund manager that is based in the US but is expanding geographically in places like Australia and Canada. It tracks its funds under management (FUM) across four strategies: US shares, global shares, international shares and emerging markets.
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What drives the payouts of this business?
GQG has committed to a dividend payout ratio of 90% of its distributable earnings to shareholders. That means investors are getting a positive payout, while also leaving a bit of money within the business to invest or improve the balance sheet.
The ASX All Ords stock deliberately doesn't charge much (or any) performance fees in a number of its funds. Therefore, the growth of its FUM is a crucial driver of revenue, profit and dividends.
At 30 June 2023, it had FUM of US$104.1 billion. The FUM had grown to US$120.6 billion by 31 December 2023, thanks to investment performance and FUM inflows as investors give GQG more money to manage. In the 12 months to December 2023, it saw net inflows of US$9.9 billion.
In the FY23 result, the company saw an average FUM of US$101.9 billion, a year-over-year rise of 14.7%. This led to a rise of 18.5% in net revenue to US$517.6 million and an 18.7% increase in net profit after tax (NPAT). FY23 distributable earnings rose 17.4% to US$297.9 million and the dividend per share rose 17.3% to US 9.1 cents.
Can the GQG dividend keep growing?
Things have started well for the ASX All Ords stock in 2024 – as of 31 January 2024, the FUM had grown to US$127 billion, which included US$1.9 billion of FUM inflows for the month. Remember, the average FUM in 2023 was US$101.9 billion, so US$127 billion is more than 24% higher.
The projection on Commsec suggests the business could pay an annual dividend per share of 18.2 cents in FY24, 19.9 cents per share in FY25 and 21.8 cents per share in FY26.
If those payments become a reality (which isn't certain), these are the potential dividend yields.
The 2024 payout could translate into a dividend yield of 8.25%.
GQG's 2025 payout may mean a dividend yield of 9%.
The 2026 payout projection equates to a dividend yield of 9.9%.
Despite the huge increase in the GQG share price, it seems the future dividends could still be very appealing.
