One of my favourite ASX passive income stocks is GQG Partners Inc (ASX: GQG), which is trading at a really cheap valuation. As shown on the chart below, the GQG share price is down more than 17% since July 2024, so I think this ASX dividend stock could be a solid buy.
Looking at the company's latest updates, I'd suggest that not only is the lower price cheaper, but the value on offer is excellent.
If you're not familiar with this business, it is a fund manager headquartered in the USA. Its main investment strategies involve US shares, international shares, global shares, and emerging market shares.
Boosted passive income
When a dividend-paying ASX stock goes through a share price decline, it boosts the possible dividend yield on offer.
If a business with a dividend yield of 6% falls 10%, the potential yield becomes 6.6%. If the share price had declined 20%, the yield would be 7.2%.
As I noted at the start of this article, the GQG share price has dropped by 17% in the last couple of months, so the ASX passive income stock's yield has materially increased.
The FY24 first-half result also included a significant dividend increase, year over year. The HY24 dividend per share rose by 46.3% to US 5.66 cents per share. This came after a 46.5% rise in the average funds under management (FUM) to U$139.5 billion and a 53.7% rise in distributable earnings to US$209.9 million.
The estimate on Commsec suggests the company could pay an annual dividend per share of AU 20.7 cents in FY24, which currently translates into a forward dividend yield of 8.1%.
It's forecast, according to Commsec, to pay a dividend per share of AU 23.7 cents in FY25 and AU 25.6 cents in FY26. These numbers translate into forward passive dividend income yields of 9.3% and 10%, respectively.
Cheap valuation
The ASX passive income stock aims to pay out 90% of its distributable earnings as a dividend to shareholders, unlocking a pleasing level of dividend income.
Based on the estimates on Commsec, GQG shares are trading at 11x FY24's estimated distributable earnings, 9.7x FY25's estimated earnings and 9x FY26's estimated earnings.
For a business growing FUM at a strong double-digit rate, this valuation looks extremely cheap. It's also exciting to me that GQG is expanding into other areas of funds management, including 'private markets', which will provide a broad range of financing and strategic solutions to mid-market private capital asset management institutions.
If the company is able to grow its net profit by at least 10% per annum over the next few years, I think GQG is on track for a good future, particularly if it continues paying large passive dividend income.
