Is the Macquarie Group Ltd (ASX: MQG) share price and dividend too good to ignore?
The Macquarie dividend yield is currently 4.3%, with a partial franking rate of 45%.
Since 2012 I would say Macquarie has been the best bank dividend share. Not because of the overall level of income, but the fact the annual dividend per share has grown from $1.50 in 2012 to $5.35 in 2018. During that time the franking rate has grown from 0% to 45% too, adding further income for shareholders.
The share price has also grown by over 400% in that time.
One of the main reasons why Macquarie has done so well is that it a large part of its earnings are generated from international sources. Indeed, around two thirds of Macquarie's earnings were international in FY18 – compared to 22% in FY98.
The big banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) have never had that high proportion of earnings from overseas and ANZ & NAB have divested a lot of their overseas subsidiaries in recent times.
Macquarie has done well to diversify its earnings to more defensive businesses since the GFC, but it would still be considered as a cyclical business so its share price would also suffer in the event of a market crash.
Despite international concern over global growth, Macquarie recently upgraded FY19 profit expectations, this year profit may grow by up to 15%
Foolish takeaway
Macquarie is trading at more than 14x FY19's estimated earnings, so it isn't cheap for a financial share. At around $100 or lower it could be an interesting choice, but at this price I am happy to sit on the sidelines for a better opportunity, it could be a good one to buy during a market downturn.
