ASX Bank Stocks - Macquarie Group (ASX:MQG) // Dividend Growth Investing Ep. 7

Описание: In this video, let's talk about ASX bank stocks, specifically Macquarie Group (ASX:MQG) and whether they are a good prospect for dividend investors. Check out my video on the other big 4 banks here:    • Big 4 Bank Stocks ASX Analysis // Investin...  

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The 4 metrics we'll use to assess the quality of Macquarie Group (ASX:MQG) are:
👉 Efficiency Ratio
👉 Historical Return On Equity, especially during tough times
👉 Dividend Growth Track Record
👉 Economic Moat

Efficiency Ratio
I want to remind you that for the efficiency ratio, the lower the better, because that shows the bank's discipline in managing operating expenses. On the 30th of June 2019, MQG's efficiency ratio is 69.68%, meaning operating expenses consumes 69.98% of their revenue. Over the last 12 years, they improved their efficiency ratio by 0.4%, definitely one of the rare few banks disciplined enough to do achieve that.

Return On Equity
In the 2019 financial year, their return equity was on 16.24% and over a span of 12 years from 2007, their ROE declined by -1.50%. Similar to the other banks, MQG went on a hunting spree during the GFC and in 2009 they first bought Canda's tristone capital global for 116 million then 3 additional acquisitions happened in Aug, Sep, and Oct. Because of those acquisitions, financing those deals would've taken a toll on the overall group's ROE during 2009 and the subsequent years.

Dividend Growth History
Over a span of 12 years (between 2007 to 2009), they grew their dividends by 12.71%, and inflation during this period is 2.3%. That's MASSIVE by the way.

Economic Moat
Okay, this part is incredibly biased, so please take this with a grain of salt. If you look at the 4 business groups in MQG, asset management, commodities, and global markets and Macquarie capital are incredibly interconnected. From advising infrastructure acquisitions to financing those deals, they can all be done with minimal external interference. That means, they can dominate a big chunk of the deal cycle, minimizing the leakage of revenue.

Comparison
Now if we compare the big 4 banks to Macquarie group, they are one of the rare few who have improved their efficiency ratio, yes they had a bit of a higher ROE decline during the GFC, but over a 12 year period, their return on equity is the lowest amongst the 5 banks. Not to mention their common equity tier 1 capital ratio is 12.2, meaning for every 100 dollars lent out, they have 12.20 in equity. Which is incredibly strong and in position to withstand unexpected shocks.

So the improvement in efficiency ratio, the lowest decline in historical ROE over the last 12 years, and a double-digit earnings growth over the last 5 years, yea I think MQG is worth any dividend investor's attention.

Disclaimer: I’m not a financial advisor. The information contained in this video is for entertainment purposes only. Any purchases of stock that I show during the video should not be considered financial advice and you should consult a licensed financial advisor before making any investment decisions. I will not be held liable for any losses incurred for investments or trades that mirror my strategy. Please be careful!

Please note: some of these links are affiliate links where I'll earn a small commission if you make a purchase at no additional cost to you.

Timestamps:
0:50 | What I Look For In A Great Bank Stock
1:22 | How Macquarie Group (MQG) Make Money
6:03 | Market News
7:04 | Why Are Stock Market Prices Disconnected To Macro-Economic Trends
10:35 | Dividend Growth Investing Portfolio Update