The ASX dividend stock GQG Partners Inc (ASX: GQG) is an appealing option for high levels of passive income.
The fund manager pays dividends quarterly, so investors can receive very regular cash flow compared to a lot of other investments on the ASX which only pay every six months.
GQG is headquartered in the US, but it is looking to grow with clients in other locations such as Australia, Canada and the UK.
The business is committed to a high dividend payout ratio of 90% of distributable earnings, so it can deliver a pleasing level of investment income.
Fund managers don't require much capital to expand, so a high dividend payout ratio won't necessarily slow the growth of the business.
Let's look at how much GQG is predicted to pay.
Dividend projection
GQG is projected to pay an annual dividend per share of 23.7 cents for FY25, according to Commsec. That would represent a dividend yield of 8.75% from the ASX dividend stock, which I'd describe as market-beating.
If the projections for FY24 and FY25 are correct, GQG's 2025 financial year payout is forecast to grow by 14.5% year over year. I believe earnings growth and dividend growth are just as important for a high-yield ASX dividend stock as a low-yield ASX growth share.
Create $250 of passive income per month
GQG doesn't pay monthly, so let's look at the target as an annual goal. Investors can then split the quarterly payments into thirds to make a monthly amount, if they wish.
Receiving $250 per month is equivalent to $3,000 per year.
To receive $3,000 annually, someone would need to own 12,659 GQG shares. At the current GQG share price, that would take an investment of around $34,000.
Can the payout keep growing?
No dividend is guaranteed, but if GQG's profit keeps rising, then the passive income seems destined to keep increasing as well.
A large majority of GQG's revenue is produced by management fees rather than performance fees, so the size of the funds under management (FUM) is integral to growth.
The FY24 first-half result saw the ASX dividend stock's average FUM increase by 46.5% to US$139.5 billion, distributable earnings increase by 53.7% to US$209.9 million and net inflows of US$11.1 billion for the period.
The company's four main investment strategies – global shares, emerging market shares, international shares and US shares – have all materially outperformed their benchmarks over the past five years. Those investment returns are good for growing FUM organically as well as attracting more FUM.
With the HY24 result, GQG said:
We believe our positive net flows of US$11.1 billion during the first half of 2024 reflect our clients' trust in our approach, driven by the consistency of our long‑term returns. We anticipate continued positive flows in 2024 with a reasonable pipeline of client demand across multiple geographies and channels.
The forecast on Commsec suggests the annual passive income could rise to 25.6 cents per share in FY26 from the ASX dividend stock, which would mean the dividend yield could rise to 9.5%, which sounds compelling to me.
