Macquarie Group Ltd (ASX: MQG) shares are some of the most impressive on the ASX, particularly considering the fact that the investment bank has become a global financial institution. Long-term shareholders have benefited from significant increases to the passive income over time.
I'm a fan of how the business has diversified operations both geographically and across investment banking, commodities and global markets (CGM), asset management and banking and financial services.
The retail banking segment is growing rapidly, partly thanks to a strong customer offering and fast turnaround times for prospective borrowers.
I think the business has a strong offering with how some businesses are resilient and consistent with the asset management and BFS segments, while CGM and investment banking are more cyclically aligned with the performance of the economy. That diversification allows the segments to deliver good profit generation in all market conditions.
Earnings is a key input for paying passive income, so let's take a look at what's expected for the ASX financial share in FY26 and how much dividend income a $10,000 investment in Macquarie shares could unlock.
FY26 passive income projection
After seeing the Macquarie AGM and FY26 first quarter update, broker UBS said that the result was overall a bit softer relative to expectations, with Macquarie Asset Management (MAM) and CGM down year-over-year, while BFS and Macquarie Capital (investment banking) were up year-over-year.
Despite that, UBS believes investors "continue to have confidence in the management team due to their proven history of effective performance, capital allocation, and execution."
The broker predicts net profit could increase to $4.17 billion and $10.04 of earnings per share (EPS) in FY26. This could translate into a dividend yield of approximately 3.1%, according to UBS.
$10,000 investment in Macquarie shares
If an Australian invested $10,000 into the ASX financial share and received a 3.1% dividend yield, they'd unlock approximately $310 of passive income for their bank account.
But, it's important to remember that Macquarie's dividends are partially franked, which adds to the grossed-up dividend yield for investors with the franking credits.
Plus, UBS thinks the Macquarie payout could increase every year between FY26 to FY30. In FY27 it could pay a 3.2% dividend yield, rising to 3.4% in FY28, 3.5% in FY29 and 3.7% in FY30.
With those dividend projections, UBS is also estimating that Macquarie's net profit would increase every year, reaching $5 billion in FY30. Of course, the profit of the global business doesn't typically go up at a steady rate for five years in a row; it may see larger increases (or decreases) due to the nature of investment banking.
