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Why this could be the best ASX blue chip dividend share

I think Macquarie Group Ltd (ASX: MQG) could be the best blue chip dividend share on the ASX.

There are plenty of blue chip dividend ideas to choose from.

The big banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) are popular dividend shares.

Infrastructure shares like Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) are popular dividend shares.

Miners like Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) are seen as dividend shares at the moment.

Telstra Corporation Ltd (ASX: TLS) has been one of the most discussed dividend shares on the ASX.

But for me, there are two things I really want to look for from a dividend share: reliability of the dividend and long-term growth. The miners are too cyclical in my opinion, Telstra’s profit is dropping, Transurban & Sydney Airport are very expensive and the big banks face lower profitability due to higher capital requirements.

I think Macquarie could actually be the best choice. It is perhaps the only blue chip that is growing long-term earnings and also growing the dividend sustainably, whilst offering a good starting yield.

The thing to remember about most of our companies is that they’re largely focused on Australia’s domestic economy. There is much more to the global economy than just Australia, so I think we need to find companies that can offer underlying earnings from multiple sources. This also makes the dividend potentially more reliable. 

Macquarie’s global operations mean that two thirds of its earnings come from outside of our domestic markets. Its earnings also come from a variety of operations like asset management, lending, commodity markets and so on, whereas most of the other ASX blue chips are reliant on one key factor such as mortgages or iron ore.

Foolish takeaway

Macquarie is trading at 15x FY21’s estimated earnings with a partially franked dividend yield of 4.4%. I think this looks decent in the low interest rate world we find ourselves in, but I’d prefer to buy shares at a lower price.

But if you’re looking for dividends then I think these top ASX dividend shares could be even greater considerations.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Sydney Airport Holdings Limited, Telstra Limited, and Transurban Group. 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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