High-quality ASX dividend stocks that have fallen significantly in price can be smart buys for income investors. Here, I'll take a look at the business GQG Partners Inc (ASX: GQG) as one that I think looks very appealing right now.
The GQG share price is down by around 20% from its peak in July 2024, as can be seen on the chart below.
It's not often we see a business that's growing as quickly as GQG fall as much as it has. I think it could be a buy for attractive potential returns in the coming years.
If a business has a dividend yield of 7% and the share price drops 10%, the yield becomes 7.7%. If it falls 20%, the yield becomes 8.4%. And, as mentioned, a 20% fall is the scale of what we're looking at with this fund manager business.
After seeing the company's FY24 result for the 12 months to December 2024, I believe this is a good time to invest.
Strong FY24 result
As a fund manager that charges relatively little in the way of management fees, growth of its funds under management (FUM) is key.
In FY24, GQG's average FUM grew by 45.4% to US$148.2 billion, and the closing FUM for the financial year increased by 26.9% to US$153 billion.
The FUM growth helped net revenue rise 46.9% to US$760.4 million, net operating income grew 50.4% to US$577.9 million, and distributable earnings rose 50.4% to US$447.9 million. This allowed annual dividends to rise by 50.2% to US 13.67 cents per share.
Over 2024, GQG's global shares, international shares, and US shares strategies outperformed their benchmarks. It was only the emerging markets strategy that underperformed (6% return compared to the 7.5% return for the benchmark), but it has outperformed over the prior three years, five years, and since inception.
Why I think the ASX dividend stock is a buy
I believe there are a number of reasons to like GQG shares right now.
First, after the Adani issues, the company experienced a net inflows of US$1.7 billion in January 2025. That's a good start to the year and suggests there could be more solid net inflows in the coming months.
Second, after changes to bribery laws in the US, Adani may no longer face legal heat. This could be helpful for GQG's investments in Adani, but time will tell what happens here.
Third, GQG's FUM continues to grow, which I think is a strong support for profit. The business reached FUM of US$160.4 billion at 31 January 2025, up from US$153 billion at 31 December 2024. Ongoing inflows and investment performance could help FUM rise further.
Fourth, due to the company's relatively low management fees compared to many competitors, I believe it's well-placed to appeal to more clients looking for cheaper fees.
Fifth and finally, the ASX dividend stock offers an appealing dividend yield because of its low price-to-earnings (P/E) ratio and relatively generous dividend payout ratio. It currently has a dividend yield of 8.8%, based on the FY24 payout.
In summary, I believe there are a lot of compelling reasons to like this business at its current share price.
