The Macquarie Group Ltd (ASX: MQG) share price has continued to fall in what has been a bad month for Australia’s largest investment bank.
About Macquarie
Macquarie Group is Australia’s largest investment bank with operations spread throughout North America, Europe, Middle East, Asia and Australia. Unlike a traditional ‘retail’ bank, like most investment banks Macquarie makes a large chunk of its profit by operating in the investment markets and managing ‘assets’ for individuals and organisations.
As of 2019, Macquarie had reported a profit for 50 years in a row.
Shares In Decline
This time of year, the popular investment saying is “sell in May and go away”. Macquarie shareholders might be wishing they sold in April.
Macquarie shares are down 11% since the beginning of the month and down again today.
The FY19 annual report saw Macquarie shares take a tumble despite net profit growth of 17% and dividend growth of 9.5%. It seems to me the dividend is actually the reason the Macquarie share price is down again today, as the shares traded “ex-dividend”. That means new shareholders are not entitled to the most recent dividend declared by management.
Here’s our Rask Finance video explaining dividend dates:
Why Does The Share Price Fall When It Goes Ex-Dividend?
Before the ex-dividend date, shareholders that purchase shares are entitled to the next dividend payment. Leading up to this date, share prices tend to increase as investors are willing to pay a premium to receive the dividend, especially for companies like Macquarie which pay a dividend of $3.60.
When shares trade ex-dividend, the share price tends to fall as investors are no longer willing to pay a premium. This is why both Macquarie shares and Australia and New Zealand Banking Group (ASX: ANZ) shares have traded lower today.
Are Macquarie Shares A Buy?
As the FY19 report highlighted, Macquarie has more promising growth opportunities than some of the other big Australian banks like ANZ and Commonwealth Bank of Australia (ASX: CBA). With the share price down 11% from recent highs, there may be a buying opportunity for an investor looking for a long-term hold.
However, with FY20 expected to be slower than FY19, the share price may not have finished its decline just yet.
Two ASX companies that may perform better than Macquarie over the long run can be found in the free investing report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
