The big four ASX bank shares get a lot of the attention for their passive income. But, the Macquarie Group Ltd (ASX: MQG) dividend could be the one to watch over the next few years.
Macquarie has four segments – banking and financial services (BFS), investment banking (Macquarie Capital), asset management (Macquarie Asset Management) and commodities and global markets (CGM). It is one of the larger lenders in Australia after a number of years of strong growth.
The business may not have as big of a dividend yield as names like National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ). But, Macquarie has the advantage of a stronger earnings growth outlook, allowing it to fund larger dividend increases over time. Let's take a look at how large the dividend could become.
FY26
The business recently reported its FY25 result, which included $3.7 billion of net profit after tax (NPAT).
UBS notes that it's difficult to predict Macquarie's revenue because of the uncertainties like global trade conflicts and changing policies. The broker has raised its short-term cash earnings estimates for FY26 by 4.1%, though it has reduced the amount of growth it's expecting in the next few years primarily because of changes at the MAM division that "will continue after the sale of the North American and European Public Investments business is finalised at the end of 2025."
The broker is predicting that Macquarie's net profit could rise more than 10% to $4.17 billion.
UBS said:
The investment case in our view continues to hinge around asset realisations, capital deployment and performance fees in Private Markets, validation around the sustainability of profits within CGM and improvements in capital market activity, beneficial to MacCap.
In terms of the dividend, the forecast on CommSec suggests the business could pay an annual dividend per share of $6.80, which would equate to year-over-year growth of 4.6%.
If it does deliver that, it would translate into a dividend yield of 3.1% for Macquarie, excluding any franking credits.
FY27
The 2027 financial year could be better for Macquarie shareholders, with an increase in both the net profit and the dividend.
While UBS reduced its earnings per share (EPS) forecast for Macquarie for FY27, it's still expecting the ASX financial share to grow its net profit by another 4.8% to $4.37 billion.
UBS is expecting another dividend hike in FY27. The Commsec forecast suggests an annual payout of $7.30 per share, which would represent growth of 7%.
At the current Macquarie share price, that translates into a dividend yield of 3.3%, excluding franking credits.
Future Macquarie dividend payments
UBS is currently projecting that Macquarie's net profit could increase in FY28, FY29 and FY30, which could help the dividend increase in each of the subsequent years as well.
Financial markets can rapidly change, so I'll be surprised if Macquarie's profit increases linearly over the next five years. However, I do expect Macquarie to be more profitable in 2030 than it is today.
Ultimately, it's pleasing to see that experts are optimistic that the company's finances are going to grow in the coming years.
