For years, Macquarie Group Ltd (ASX: MQG) has often been described not only as the 'millionaire's factory', but as the ASX's fifth bank share.
This description of Macquarie as a bank stock is not a simple one. Sure, Macquarie does run a large banking business, offering mortgages, loans, bank accounts, and credit cards to its customers. But banking remains a relatively small part of this company's operations.
The major ASX banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) are beloved by ASX investors for the large, and usually fully franked dividends they routinely pay out. In fact, many investors buy bank stocks for this reason alone.
But what of Macquarie shares? If the millionaire's factory can also be described as the ASX's fifth bank, surely buying Macquarie shares for income is a good idea?
Well, let's examine that proposition.
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How much income do Macquarie shares pay?
Macquarie is a company with a dividend payout policy. It aims to distribute between 50% and 70% of its net earnings out to shareholders as dividends each year.
However, given that Macquarie operates a wide range of underlying businesses, including investment banking and funds management, its earnings tend to fluctuate far more than those of other pure-play banks like CBA or Westpac.
We can see this in Macquarie's divided history. Whilst Commonwealth Bank's dividend track record looks like something resembling a staircase (albeit with a few missing steps to mark occasions like the COVID pandemic), Macquarie's is a little more volatile.
The dividends from this business have been on an upward trajectory for at least the past decade. However, they are not exactly consistent.
To illustrate, Macquarie shares paid out an annual total of $6.07 in dividends in 2021, rising to $6.50 per share in 2022. 2023 saw another increase to $7.05 per share, but 2024 saw Macquarie return to $6.45 per share. Even so, the track record is incontrovertibly a positive one. Maquarie's interim dividend from 2025 came in at $3.90 per share. That was a slight increase from the $3.85 investors bagged for the same payment last year.
What about franking credits?
There is one more caveat for income investors to consider before adding Macquarie shares to their dividend portfolios. Unlike most other ASX bank shares, Macquarie's dividends hardly ever come fully franked. This is more to blame on Macquarie's international business model than anything else. ASX shares can only generate franking credits to pass on to shareholders if they pay corporate taxes to the Australian government.
Given Macquarie's extensive international earnings bases, this is not possible for this business. As such, this stock's dividends usually come with only partial franking credits attached. The last two dividends this company paid out were both franked to 35%, and the two before that were franked to 40%.
That's certainly something income investors should keep in mind.
Aside from that, Macquarie has a long track record of paying out decent dividend income to shareholders, and I don't see any reason why this won't continue well into the future.
At the current Macquarie share price, this ASX financial stock is trading on a dividend yield of 2.94%.
