An attractive dividend yield and a 30% upside? Well, that sounds peachy. But could Macquarie Group Ltd (ASX: MQG) shares really deliver both of those things in 2022?
Macquarie is one of the most well-followed ASX shares on the market. Many call it a bank, or even the ASX's fifth big four bank. Macquarie does offer traditional banking products such as term deposits and mortgages. But this company does a whole lot more than just that. Macquarie is a broad player in the financial space. It does investment banking and asset management amongst other things.
And it does this exceptionally well, judging by its share price performance. Over the past five years, Macquarie shares have given investors a return of over 83%, not including dividends. That runs rings around the other big ASX bank shares like Commonwealth Bank of Australia (ASX: CBA).
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Macquarie shares have a 30% upside: broker
One ASX broker reckons Macquarie shares can run even higher going forward.
As my Fool colleague James covered this week, Morgans is currently very bullish on Macquarie shares.
Although the broker notes that it will be tough for Macquarie to top the net profit after tax (NPAT) of $4.7 billion it delivered in FY2022, it is still rating the company a buy with a 12-month share price target of $215.
If that came to pass, it would indeed represent an upside of 31.25% on current pricing.
Here's how Morgans justified its bullish outlook:
We anticipate some near-term earnings volatility over FY23 but we like MQG's favourable longer-term growth profile and consistent history of delivering strong returns (~15% average ROE over time).
What about dividends?
Not only is Morgans pencilling in a 30% share price upside, it is also factoring in some big things when it comes to dividend payments.
The broker anticipates a full-year dividend of $7.07 per share over FY2023, and then $7.47 per share over FY2024. For some context, Macquarie has paid out $6.22 in dividends per share over FY2022, giving it a current trailing dividend yield of 3.78%.
So according to Morgans, Macquarie has a 31.25% upside over the next 12 months, with a forward dividend yield of 4.32%. No doubt that would sound pretty good for most investors. But we shall have to wait and see if Morgans' tips prove to be accurate.
At the current Macquarie share price, this ASX 200 share has a market capitalisation of $63.1 billion.
