Macquarie is Australia’s global investment bank and has seen its share price fall by 39% since the selloff started, though it was down 52.4% at one point.
The global investment bank has been one of the best financial businesses since the GFC in my opinion. Obviously the global economy going into lockdown is not good for Macquarie’s business. There aren’t going to be many deals or IPOs whilst this is going on. Asset prices are down as well. But I think the share price decline largely reflects this.
Macquarie has increased its dividend several years in a row. The Macquarie trailing partially franked dividend yield is 6.6%. But who knows what the Board will do with the dividend during this period?
I think it would be unwise to let go of a lot of capital during 2020 in the form of a dividend when it may be needed for stability. That cash could also be used for beaten-down opportunities. There are plenty of those around right now.
Is Macquarie a buy?
The important thing to remember with coronavirus is that this period will pass at some point. Whether it takes a month, six months or even longer – it will end.
Don’t forget that interest rates are now at record lows (again for several countries). This should make these low share prices seem more attractive to investors.
If you take a long-term view, I think Macquarie looks like a pretty decent buy idea whilst accepting there could be a lot more volatility to come in the coming months. However, I’ve got my eyes on other investment opportunities.
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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. 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.