The ASX dividend stock Pinnacle Investment Management Group Ltd (ASX: PNI) has seen a 28% decline (at the time of writing) since 7 August 2025. There are not many compelling ASX dividend shares that have fallen as much as that in the last few months.
I think it's exciting when a dividend-paying business falls. We're able to buy them at a lower price, but the dividend yield on offer also increases.
For example, if a business had a dividend yield of 4% and the share price drops 10% then the yield becomes 4.4%. A 20% decline would result in a dividend yield of 4.8% for prospective investors.
If you haven't heard of Pinnacle before – it's an investment business that takes stakes in impressive funds management businesses (affiliates) and helps them grow. It assists their growth with numerous behind-the-scenes services (such as fund administration, compliance, legal, and so on), allowing the fund manager to focus on just investing – the most important part for clients.
Following a 28% decline in the share price, the Pinnacle dividend yield has materially increased. That's the first appealing aspect of the business I want to highlight.
Good dividend yield
For an ASX dividend stock to be worthwhile for an income investor, I think it needs to have a solid starting yield.
The latest annual dividend per share from the business was 60 cents in FY25. At the current Pinnacle share price, this translates into a cash dividend yield of 3.3% and a grossed-up dividend yield of nearly 4.5%, including franking credits.
While that's not the biggest dividend yield around, it's comparable with some of the best term deposit rates out there right now for Australians.
But, Pinnacle isn't a term deposit – it has growth potential.
Consistent ASX dividend stock
There are plenty of high-profile businesses that have cut their dividends in the last several years. But not Pinnacle.
Between FY16 and FY25, there was only one year in which the dividend didn't increase. The company maintained its payout in FY20 when there was a huge amount of COVID uncertainty affecting economies and share markets.
Pleasingly, the business is projected to continue growing its payout in the coming financial years.
According to the projection on CMC Markets, the company is forecast to increase its FY26 payout to 66.5 cents per share and then to 81 cents per share in FY27. Including franking credits, those estimations translate into potential grossed-up dividend yields of 5% and 6.3%, respectively.
Earnings growth potential
One of the main reasons I'm attracted to this business and have recently invested in it is the quality and growth of its funds under management (FUM).
The affiliates largely have a long-term track record of outperforming their benchmarks, which is a powerful tool for growing FUM organically and attracting further inflows of money from clients.
In the three months to September 2025, affiliate FUM increased by a further $18 billion, or 10%, to $197.4 billion. This was helped by net inflows of $13.3 billion. FUM growth is a key driver of Pinnacle's earnings, so this bodes well for at least FY26 if not beyond.
The ASX dividend stock is currently trading at around 20x FY27's estimated earnings, according to the forecast on CMC Markets.
