The ASX dividend stock GQG Partners Inc (ASX: GQG) has seen its share price fall 27% from its peak in July 2024, as the chart below shows. I think this business could be a great passive income opportunity right now.
GQG is a fund manager that provides share investment funds based on a few different strategies including US shares, international shares excluding US shares, global shares and emerging market shares.
When a share price falls, it boosts the dividend yield for prospective investors. For example, if a business had a dividend yield of 7% and then the share price declines 10%, the dividend yield turns into 7.7%. As I've mentioned, GQG shares have dropped 27%, which is a real boost to the yield.
Let's look at how enticing the dividend income could be.
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Dividend potential
The business pays a dividend to investors every three months, which is an excellent feature of the company – it's providing regular cash flow.
In recent times, the ASX dividend stock has provided investors with a dividend payout ratio of 90%, which provides a generous level of passive income.
The broker Macquarie is predicting that GQG could pay a dividend per share of US 14.7 cents, translating into a dividend yield of 10.2%, for FY25.
Cheap valuation
One of the reasons why GQG has such a high dividend yield is that it's trading on a low price/earnings (P/E) ratio. The lower the earnings multiple, the higher the dividend yield is, all things being equal.
I think GQG is trading on a P/E ratio undervalues its ongoing organic growth rate, helped by both investment performance of its funds and the net inflows the business is seeing.
According to the earnings estimates from Macquarie, the ASX dividend stock could generate US 15.9 cents. That means the current GQG share price is valued at just 9x FY25's estimated earnings. I think the ASX dividend stock could rise 10%, and still be cheap.
Ongoing growth
The business is generating enough underlying growth to trade on a higher earnings multiple, in my view.
When the ASX dividend stock reported its funds under management (FUM) update for March 2025, GQG revealed that three of its four flagship categories outperformed their relative benchmarks. All four of the strategies outperformed their respective benchmarks since inception by an average of at least 2.8% per year.
Not only is the investment performance strong, but GQG continues to experience solid net inflows. In the first four months of 2025, it saw net inflows of US$6 billion, which is a strong tailwind for earnings. As at 30 April 2025, it had FUM of $163.6 billion, and I think this figure can continue growing for the foreseeable future (barring a bear market), helping propel the dividend even higher than it already is.
