I'm always on the lookout for ASX dividend stocks that could provide appealing passive income and also trade on a compelling valuation.
When businesses are growing, but the valuations are down, the dividend yield can get a real boost.
For example, if a business has a dividend yield of 5% and the share price drops 10%, the yield becomes 5.5%. If the share price falls 20%, the dividend yield becomes 6%, and so on.
I'm going to talk about two ASX dividend stocks that are trading at a price that could be too good to ignore.
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) that owns cattle farms, almond farms, macadamia farms, vineyards and cropping farms.
Its property portfolio is spread across Australia in different states and climactic conditions. I like the diversification of its asset base.
The business regularly tells investors about its underlying net asset value (NAV). This metric includes the value of all assets minus all liabilities (such as debt) to leave a net figure. At 31 December 2024, it had an adjusted NAV of $3.10, so the Rural Funds share price is trading at a discount of more than 40% to this.
I like how it's growing its underlying profitability. It's expecting to grow its adjusted funds from operations (AFFO) by 4% to 11.4 cents per unit in FY25, which is a solid growth rate in this environment, in my view. This growth is driven by both rental indexation and the investments it has made in some farms to benefit tenants (such as increased water access) to unlock more rental income and improve the value.
Despite the high interest rate, it has managed to pay a distribution per unit of 11.73 cents each year for the last few years, and it has guided it will pay that amount in FY26. That means the forward distribution yield is expected to be 6.6%, which I think is a good starting point.
GQG Partners Inc (ASX: GQG)
This ASX dividend stock is a US-based fund manager that provides funds across a number of strategies, including US shares, international shares, global shares and emerging market shares. In its recent FY24 result, GQG showed that each of its main strategies have outperformed their benchmarks over the prior five years.
Delivering outperformance helps with multiple things. It obviously grows the funds under management (FUM) (which helps percentage-based management fees), it encourages clients to keep their money with GQG, and it could lead to more net inflows.
The long-term growth of the global share market is an organic tailwind for growth. GQG just needs to see net inflows rather than net outflows.
In January 2025, GQG reported that it experienced net inflows of US$1.7 billion. This helped the FUM grow from US$153 billion to US$160.4 billion at 31 January 2025. That's just one month, but it shows how the combination of net inflows and positive returns can really power FUM (and GQG's revenue) higher.
Fund managers normally trade on a lower price-earnings (P/E) ratio than some other sectors, but I think GQG's growth and dividend look appealing at this valuation.
According to the forecasts on Commsec, the GQG share price is valued at around 10x FY25's estimated earnings with a forecast dividend yield of approximately 9%.
