Macquarie Group (ASX:MQG) Will Pay A Dividend Of A$2.80

The board of Macquarie Group Limited (ASX:MQG) has announced that it will pay a dividend on the 17th of December, with investors receiving A$2.80 per share. The payment will take the dividend yield to 3.2%, which is in line with the average for the industry.

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Macquarie Group's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, Macquarie Group has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Macquarie Group's payout ratio of 68% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 38.6%. Analysts forecast the future payout ratio could be 66% over the same time horizon, which is a number we think the company can maintain.

See our latest analysis for Macquarie Group

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was A$3.30 in 2015, and the most recent fiscal year payment was A$6.50. This implies that the company grew its distributions at a yearly rate of about 7.0% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Macquarie Group has grown earnings per share at 9.2% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Macquarie Group's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Macquarie Group that investors need to be conscious of moving forward. Is Macquarie Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.