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2 ASX dividend shares with compelling income potential

I really like the look of some ASX dividend shares because of their potential to pay attractive levels of dividends to investors.

They don’t necessarily have to be paying a big dividend today, but over the next year or two they could really grow those dividend payments.

That’s why I like the look of these two:

Future Generation Global Investment Ltd (ASX: FGG)

Future Generation Global is a listed investment company (LIC). It specialises investing in the funds of fund managers that invest in overseas shares. Each fund that it’s invested in is a whole portfolio, so the underlying diversification is solid in my opinion.

One of the special things about this LIC is that those fund managers don’t charge any management fees or performance fees, so shareholders get their services for free. That’s so that Future Generation Global can donate 1% of its net assets each year to youth mental charities.

The actual investment returns over the longer-term have matched, and sometimes beaten, the global share market with lower volatility.

Future Generation Global has also seen a shift in its profit accounting, which should allow for a growing dividend in the coming years. That’s good news from the ASX dividend share.

I’m projecting another $0.03 per share half-year dividend, bringing the annualised dividend to $0.06 per share. That translates to a dividend yield of 3.7%, or 5.25% including franking credits.

I think it’s a solid option for international diversification and dividend growth. It’s also valued at around 10% to its underlying pre-tax value.

GQG Partners Inc (ASX: GQG)

This is the new, pretty large investment manager that has listed onto the ASX. It offers a number of different investment strategies including global shares, quality dividend income, emerging market shares and US shares.

The business has seen rapid growth of its funds under management (FUM), which is a key driver of funds management profitability. I think that GQG Partners’ FUM can keep rising thanks to its good investment record and expanding distribution. In October 2021 alone, FUM increased from US$85.8 billion to US$90.4 billion.

In its prospectus, it forecast to reach FUM of US$92.5 billion by June 2022, so this target could come much quicker, making more profit and allowing for a bigger dividend in FY22.

GQG said it is targeting a dividend payout ratio of between 85% to 95% of distributable earnings, expected to be paid quarterly. The first dividend is expected to be paid in March 2022 and is expected to be unfranked. Based on the prospectus, the yield was expected to be 5% to 5.5%. That would be solid starting year from the ASX dividend share.

Considering the listing price was for between $2 to $2.20, and the GQG share price is now $1.84, the yield looks like it will be even better than that to start with.

GQG looks like it has a good long-term future considering its management fees are lower than the typical globally-focused investment manager.

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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

Not only are we offering these 11 investment ideas completely FREE, we've also released an in-depth podcast to go with the report!

So, whether you have $2,000 or $50,000, our brand new analyst report could help transform your watchlist. Right now, you can get the full analyst report emailed to you for FREE by CLICKING HERE NOW.

At the time of publishing, Jaz owns shares of Future Generation Global.

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