There aren't many S&P/ASX All Ordinaries Index (ASX: XAO) stocks that are growing, have a low valuation, and offer a big dividend yield. I think the ASX share GQG Partners Inc (ASX: GQG) is a compelling opportunity.
GQG is a US-based fund manager that offers four main strategies: US shares, international shares, global shares, and emerging market shares.
Following the drop of more than 25% from 11 November 2024, GQG shares are now cheaper, and the dividend yield has been boosted.
When a share price falls, the dividend yield increases. For example, if a business has a 6% dividend yield and the share price drops 10%, the yield becomes 6.6%. This effect has played out more strongly with GQG shares.
Let's look at the investor metrics for the ASX All Ords stock.
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Dividend yield and P/E ratio
Many fund managers are valued on a low multiple of their earnings, compared to other sectors, which is called the price-earnings ratio (P/E). This helps give the business a cheap valuation and a good dividend yield.
The business has committed to a dividend payout ratio of 90% of its distributable earnings, which is generous but still allows the company to retain some profit and reinvest and/or strengthen the balance sheet.
A high payout ratio enables a large dividend yield. According to the forecasts on Commsec, GQG could pay a dividend yield of 10.4% in FY26. Depending on how strongly the S&P/ASX 200 Index (ASX: XJO) performs, the dividend yield alone could deliver a market-beating performance.
Using the projected earnings per share (EPS) for FY26 on Commsec, at the current GQG share price it's trading at under 9x FY26's estimated earnings.
Could the ASX All Ords stock deliver growth?
Funds under management (FUM) is a key factor for the business because nearly all of its revenue comes from management fees rather than performance fees.
At 30 June 2024, the business had FUM of US$155.6 billion. This had grown to US$159.5 billion by 30 November 2024 from a combination of net inflows of new client money and its funds' investment performance.
Despite the volatility caused by its Adani investment, its FUM growth and net inflows were US$0.1 billion during November (with gross inflows of US$4.2 billion).
Between 1 December 2024 and 6 December 2024, it reported it had experienced US$1.1 billion of net inflows, and its FUM had grown to US$161.5 billion.
This shows to me that it continues to experience good inflows and good investment performance by the funds, which could help reassure investors and grow FUM further.
Assuming the global share market remains positive, I believe GQG has a very good chance of hitting the forecasts on Commsec.
