In my view, ASX investors should consider searching the stock market for potential dividend investments right now. That's because it seems the next RBA rate cut looks likely for August, so it could be a good idea to look at Australian dividend champions.
There are plenty of good ASX dividend shares to consider, such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which has increased its annual ordinary dividend every year since 2000.
But, there are other businesses which can provide a much larger dividend yield. One of the stocks that's definitely worth highlighting is GQG Partners Inc (ASX: GQG).
Although it is not headquartered in Australia, the company is listed on the ASX and has an operational presence in the country.
The Australian dividend champion has a great record
There are not many businesses on the ASX that have increased their payout every year since they became public companies (though it has only been listed for a few years).
The business has maintained a dividend payout ratio of 90% of distributable earnings in recent years. Growth of profit has funded the dividend growth, which has been predominantly driven by the progress of its funds under management (FUM) – how much money it manages for clients.
For example, in the FY24 result (released in February 2025), the business reported 45.4% growth of average FUM to US$148.2 billion, 50.4% growth of distribution earnings to US$447.9 million, and a 50.2% rise of dividends per share to US 13.67 cents.
Huge yield
The market generally values a funds management business on a much lower multiple of its earnings than other sectors such as technology or telecommunications. This results in companies in the sector having much higher dividend yields – the lower the price-earnings (P/E) ratio, the higher the yield.
Using the FY24 payout, that translates into a dividend yield of more than 10% at the time of writing.
Growth prospects
The Australian dividend champion has a strong track record with its funds of delivering outperformance of their respective benchmarks, which is an excellent organic tailwind for FUM growth.
GQG continues to attract new FUM inflows from clients, which further boosts FUM and, therefore, the dividend.
At 30 June 2025, it reached US$172.4 billion of FUM, an increase of 12.7% from December 2024, which should help fund larger dividends in 2025. It was helped by US$8 billion of net inflows in the first six months of the year.
I think GQG is a very compelling stock to own for passive income.
The post ASX investors: I'd go big on this undervalued Australian dividend champion appeared first on The Motley Fool Australia.
Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Gqg Partners. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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