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Is the Macquarie share price a buy?

Is the Macquarie Group Ltd (ASX: MQG) share price a buy today?

It certainly looks more attractive after falling around 15% over the past four months. One of the most pleasing aspects of that fall has resulted in the trailing dividend yield to increasing to 4.9%, partially franked.

Macquarie is my clear favourite bank compared to Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA).

Before comparing Macquarie’s actual operations to the big four banks, I’m attracted to the fact that the Macquarie dividend has been growing at a much faster pace. Its dividend has nearly quadrupled since the 2012 payment of $1.5 per share.

The big banks rely mostly on Australian mortgages for their earnings. Macquarie generates income from a variety of segments and has a global earnings base.

For example, it’s the leading global infrastructure manager (by funds under management). It provides various corporate and asset finance, including aircraft leasing. It has Australian banking operations, like other ASX banks, however only 33% of Macquarie’s total income came from local sources, the rest mostly came from the Americas and Europe.

Macquarie continues to grow its profit, in the recently-reported half-year result it showed that earnings per share (EPS) rose by another 5%. This growth certainly beats the banks recently-reported growth numbers.

If there were to be another global downturn, a GFC-lite, then Macquarie would be affected. But its focus on annuity-style businesses in the past decade should mean its earnings aren’t damaged as much in another recession.

Foolish takeaway

I believe Macquarie is the best bank on the ASX. The fact it sailed through the Royal Commission was a clear sign that it’s a well-run ship. I like that it’s progressive, Macquarie is focused on ‘following the money’ into areas like renewable energy, Asia and infrastructure.

Macquarie is only trading at 13x FY19’s estimated earnings. I am interested in Macquarie shares, however I think that the next economic dip may be an even better time to buy. Until then, there could be better non-cyclical growth options for your portfolio.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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