With the big four banks offering lower than normal dividend yields, income investors could get more bang for their buck if they look elsewhere in the market.
For example, the ASX income stock in this article is forecast to provide investors with a yield that is more than twice the size of the market average of 4%.
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Which ASX income stock?
The stock we are going to look at today is GQG Partners Inc (ASX: GQG).
It describes itself as a boutique investment management firm that manages global and emerging market equity portfolios for institutions, advisors and individuals worldwide.
At the last count, it had US$172.4 billion of funds under management (FUM).
On Friday, the ASX income stock ended the week at $2.15. This means that with $500 (and an extra 95 cents) to spend, investors could pick up 233 GQG shares.
And this certainly could be worth it. The team at Macquarie is expecting GQG Partners to pay dividends of 15.2 US cents (23.1 Australian cents) per share in FY 2025 and then 16.7 US cents (25.3 Australian cents) per share in FY 2026.
Based on its current share price of $2.15, this equates to dividend yields of 10.75% and 11.75%, respectively.
It also means that those 233 GQG shares would pull in passive income of $53.82 and then $58.95 if Macquarie's forecasts prove accurate. Not bad for a $500 investment!
But it gets even better!
Big potential returns
According to the note, the broker has an outperform rating and $2.90 price target on this ASX income stock.
This implies potential upside of approximately 35% and values those 233 shares at $675.70.
Throw in the $50+ dividend income and you are looking at a total return in the region of approximately 45% or $225 on a $500 investment.
Commenting on its outperform rating, the broker said:
The team at Macquarie thinks that its shares are cheap at current levels. Last week, the broker highlighted that "At <9x NTM P/E with a >10% yield, valuation remains attractive."
The quant model currently holds a strong positive view on GQG Partners. The strongest style exposure is Profitability, indicating this stock is efficiently converting investments to earnings; proxied by ratios like ROE or ROA. The weakest style exposure is Price Momentum, indicating this stock has had weak medium to long term returns which often persist into the future.
