Looking at the current share prices of Macquarie Group Ltd (ASX: MQG) and Westpac Banking Corp (ASX: WBC), I would much prefer to buy shares of Macquarie.
The global investment bank is seeing a resurgence. Like most globally-focused ASX shares, the Macquarie share price has increased over the past four weeks, it's up by 8.7%.
Macquarie surprised the market at the end of August by raising $1 billion from its institutional investors and a bit from regular investors to fund some investment opportunities in the renewables, technology and infrastructure sectors.
For example, recent investments by Macquarie has been into a UK offshore wind farm and further investment in a Taiwanese wind farm.
As part of the capital raising, Macquarie gave a trading update which revealed that the result for the first half of FY20 is expected to be up approximately by 10%, although the full year result is still expected to be lower than FY20 due to a strong second half.
The fact that Macquarie is still able to produce a half-year result with a double-digit profit growth shows the strength of its operating model with different segments that are across the world.
You can't expect any business to grow its profit every single year, particularly a financial one, but Macquarie has managed to grow profit at a good rate for several years. Meanwhile, Westpac's profit has been going backwards because of the royal commission and before that growth was getting sluggish.
Foolish takeaway
Some market commentators now believe that Westpac may cut its dividend by around 10%. A current grossed-up dividend yield of 9% from Westpac may be a little too generous. I always think it's better for a business to have a lower dividend and re-invest for some growth like Macquarie rather than mostly pay all the profit out unless there are no decent re-investment opportunities.
