Down 43% this year with an 18% yield, are GQG shares too cheap to ignore?

GQG Partners Inc (ASX: GQG) shares have fallen a lot over the last year or two, as the chart below shows. Year to date, they have dropped 43%. GQG now has a huge dividend yield.

GQG is a funds management business that's headquartered in the US but has operations in a number of other markets including Canada, the UK, Europe, and Australia.

It's understandable that the GQG share price has fallen because it's regularly seeing more than US$1 billion (net) of client money flowing out of the door. For example, in August 2026, the net outflows were US$4.3 billion.

After such a large share price decline, there could be a huge dividend yield, and it's worthwhile considering if it's now really cheap.

Huge dividend yield

The business pays a dividend to shareholders every quarter, and it's shaping up to be a huge dividend yield on an annualised basis.

It's possible the dividend yield may not be quite as large as what I'm about to say because GQG's funds under management (FUM) could decline during the next 12 months. But there are also a couple of positive signs, which I'll get to in a moment.

The latest quarter saw the business declare a quarterly dividend of US 3.27 cents, or AU 4.67 cents per GQG share. At the time of writing, that quarterly dividend equates to a dividend yield of 4.7%.

If it were to pay the same dividend for four quarters in a row, it'd be a dividend yield of 18.8%.

The latest dividend represented 90% of the company's third-quarter distributable earnings. That means it's trading at around 5 times its current annualised distributable earnings.

Positive signs

The fund manager's latest update was the monthly FUM update for September 2026. In that month, the business saw US$2.3 billion in FUM outflows, a significant reduction from the US$4.3 billion in August 2026.

Secondly, its FUM was maintained at US$149.2 billion during the month of September 2026, thanks to investment performance. If it maintained its FUM at the same level forever, the dividend yield return alone would be huge. However, it's unlikely FUM will stay the same.

GQG's long-term investment performance was strong prior to a downturn in performance in the past couple of years as it tried to protect investor money by being defensive.

But some of GQG's main funds have outperformed their benchmarks over the past month and three months. That's very short-term, but if it can continue outperforming, the longer-term performance would look stronger again and this could lead to clients keeping their money with GQG.

Is the GQG share price a buy?

According to CMC Invest, there have been five analyst ratings on the business within the last three months. The average price target of those five brokers was $1.46, implying a possible rise of 46% over the next year.

It faces a tough challenge to turn FUM net outflows into net inflows, but the GQG share price could be significantly undervalued at this level, according to analysts.

The post Down 43% this year with an 18% yield, are GQG shares too cheap to ignore? appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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