Throughout 2014, Macquarie Group Ltd (ASX: MQG) has handily outperformed the S&P/ASX 200 Index (INDEX: ^AXJO) (ASX: XJO).
In fact with dividends included, Macquarie shareholders would be sitting on a total return of 12.5% this year, versus a relatively flat return from the broader market.
Moving into 2015 however, there's a number of reasons to believe Macquarie – Australia's leading investment bank – can continue its strong performance.
For example, the group recently announced a strong first half profit performance, up 35%, in the six months to 30 September 2014. It also provided guidance of a slightly higher result for the full financial year, compared to FY14. This is despite the fact its FY14 results included the Sydney Airport distribution.
In 2015 Macquarie is likely to benefit from increased investor confidence. It could also see increased performance fees on managed funds, and higher corporate banking fees. It'll also benefit from a lower Australian dollar. Macquarie derives approximately 65% of its revenues from foreign markets. In the next year analysts expect the bank's earnings per share to jump to over $4.18 per share, placing the stock on a P/E multiple of 14.
Finally Macquarie is expected to pay a big dividend in 2015, with partial franking. Analysts are anticipating a dividend as high as $3.00 per share. Meaning Macquarie's stock currently trades on a forecast dividend yield of 5.1%.
Buy, Hold, or Sell?
Whilst I don't believe Macquarie Group is a standout buy at today's prices, it's likely to reward shareholders with both increased dividends and profits in the next year. These will be helped along by increased global investor confidence and a falling Australian dollar.
