GQG Partners Inc (ASX: GQG) is an ASX passive income all-star in my opinion. It just grew its annual dividend per share by 17%, and I think it's still one to watch.
The GQG share price has taken its shareholders on an impressive run, rising by around 30% since the start of 2024. It has lifted by 48% since I called it "my pick for superior income in 2024".
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Dividend growth
GQG reported its 2023 annual result on Friday, which showed average funds under management (FUM) increased 14.7% to US$101.9 billion, net revenue increased 18.5% to US$517.6 million, net profit after tax (NPAT) grew 18.7% to US$282.5 million and distributable earnings rose 17.4% to US$297.9 million.
All of those growth numbers helped GQG's dividend per share increase 17.3% to US 9.1 cents. At the current GQG share price and foreign exchange rate, that translates into an FY23 dividend yield of 6.4%.
There aren't too many fund managers delivering double-digit profit growth and dividend growth at the moment.
Could the ASX passive income payments keep growing?
The ASX passive income all-star generates nearly all of its revenue from asset-based management fees as opposed to performance fees. If funds under management (FUM) grow, then revenue, net profit and dividends should be able to keep growing.
The fund manager experienced an average FUM of $101.9 million in FY23, and it finished the year with a closing FUM of $120.6 million. If the US$120.6 billion closing FUM ends up being the average FUM for FY24, that would suggest a rise of another 18%. Ongoing net inflows can help here.
Fund managers are very scalable businesses – it doesn't necessarily take another 10% more people to manage 10% more FUM, so more FUM can translate into even faster earnings growth.
But, let's play with the idea that the GQG dividend could grow by 18% in FY24. At the current GQG share price, that would translate into a forward dividend yield of 7.5%.
It's quite possible the dividend could grow even more than that because at 31 January 2024, the FUM reached US$127 billion. So, we'll have to see what the net inflows and investment performance are for the rest of 2024.
But, I'm quite optimistic about the business, considering its investment funds have managed to deliver good returns over the long term.
