I think that Macquarie Group Ltd (ASX: MQG) is the best ASX bank dividend share on the stock exchange compared to ones like Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Bank of Queensland Limited (ASX: BOQ).
Macquarie is Australia's main investment bank, although it has operations all across the world. Indeed, around two thirds of its earnings are actually generated from overseas. This is one of the main reasons why I prefer Macquarie to domestic ASX banks, its earnings are much more geographically diverse have less country-specific risk.
Another reason why I prefer Macquarie is that its earnings are split across different segment, whereas banks largely just earn their profit from loans through the net interest margin (NIM). The NIM of most banks is getting a little smaller these days.
Macquarie has four large segments of Macquarie Capital, Commodities & Global Markets, Banking & Financial Services and Macquarie Asset Management (MAM).
Macquarie has built its asset management business into an excellent profit driver which delivers reliable earnings because of the asset management fees. MAM has grown its assets under management (AUM) to $563.4 billion at the end of September 2019. It's the focus by management on 'annuity style' businesses that has helped consistently good shareholder returns.
The biggest reason why I think Macquarie is a better dividend share than the domestic ASX banks is the growth. Since the GFC the investment bank has impressively and consistently grown its net profit. This earnings growth has allowed Macquarie to steadily grow the dividend.
Foolish takeaway
Even in the latest result, the FY20 half result to September 2019, Macquarie grew its dividend by another 16%. Quite a lot of the ASX banks gave shareholders an income cut this year.
Macquarie still expects the full year profit this year to be down on compared to FY19. It's trading at 16x FY21's estimated earnings with a partially franked dividend yield of 4.4%. I'm not jumping to buy, but I do think it's still better value than other banks because of the long-term growth potential.
