It’s been a blockbuster week for ASX bank shares. We saw 3 of the four major banks all report half-year earnings this week, Commonwealth Bank of Australia (ASX: CBA) being the exception. All three have reported major boosts in earnings and profits, and a robust increase in banking dividends to boot. Well, today, we have another ASX bank that’s reported its earnings. Macquarie Group Ltd (ASX: MQG) isn’t officially one of the big four. But is sometimes referred to as ASX’s fifth bank for its size and clout in the ASX financial space.
Although its banking activities are far less prevalent than the other banks, Macquarie is still a popular share for ASX investors. And it didn’t disappoint this morning. Macquarie shares are, at the time of writing, up 0.7% to $160.09 a share. That’s just shy of the bank’s all-time high.
Investors have evidently been impressed with what Macquarie had to offer this morning. As we reported earlier, the bank reported a 10% rise in profits to $3.02 billion, which included a 39% jump in its trading and investments division.
But there was a nice surprise in the dividend department as well. Macquarie announced that the company’s final dividend would come in at $3.35 a share. That’s a boost of 86% over last year’s level.
So how much is Macquarie’s dividend now worth?
Macquarie announced beefed-up dividend
Well, on the current share price, the company has a trailing dividend yield of 1.97%. That comes from the bank’s last 2 dividends, which came in at $1.80 and $1.35 per share respectively, both paid out last year with 40% franking. Both of those dividends represented big downgrades from the prior year when the bank paid out $3.60 and $2.50 respectively.
So with Macquarie’s newly announced dividend, its trailing 12-month dividend will be $4.70 per share. That would give us a trailing yield on current pricing of 2.94%.
If we annualise Macquarie’s new dividend, we would get a potential forward dividend of $6.70 per share, which would represent a forward yield of 4.19%.
That’s not quite as high as the other ASX banks. But investors have rarely priced Macquarie at a similar yield level to the other big four banks anyway. Even so, today Macquarie has beefed up its income chops substantially and has gone a long way in restoring its dividend to a pre-COVID level. No doubt shareholders will be pleased with that development.