Macquarie’s CAP Note Dividend: What Risks Lie Ahead for Investors?
Macquarie Group Limited has announced a quarterly ordinary dividend of AUD 1.7239 per CAP Note security, payable in September 2025, with partial franking and a total distribution rate of 6.84% per annum.
- Ordinary dividend of AUD 1.7239 per CAP Note security
- Dividend partly franked at 35%
- Total distribution rate of 6.8393% per annum
- Payment date set for 10 September 2025
- No approvals required prior to dividend payment
Macquarie Group’s Dividend Announcement
Macquarie Group Limited has confirmed an ordinary dividend distribution of AUD 1.7239 per security for its CAP NOTE 3-BBSW+4.15% PERP NON-CUM RED T-09-26. This dividend relates to the quarter ending 9 September 2025, with the payment scheduled for 10 September 2025. The announcement, made on 12 June 2025, provides clarity for investors on expected income from this hybrid security.
Dividend Details and Tax Treatment
The dividend is partly franked at 35%, reflecting a franked amount of AUD 0.6034 per security. This partial franking means investors receive a tax credit for a portion of the dividend, which can be advantageous for Australian taxpayers. The unfranked portion is AUD 1.1205 per security, indicating the dividend is not fully franked. The applicable corporate tax rate for the franking credit is 30%, consistent with Australian corporate tax standards.
Distribution Rate and Calculation
The total distribution rate for the period is calculated at 6.8393% per annum, based on a 92-day payment period from 10 June to 9 September 2025. This rate combines the 90-day BBSW mid-rate of 3.7152% with a fixed margin of 4.15%, adjusted for franking. The calculation methodology ensures that the dividend reflects prevailing market interest rates plus a fixed premium, providing a predictable income stream for holders of the CAP Note.
No Additional Approvals Required
Importantly, Macquarie Group has confirmed that no external approvals; such as security holder, court, or regulatory consents; are required before the dividend payment. This streamlines the process and reduces uncertainty for investors anticipating the distribution.
Implications for Investors
For investors in Macquarie’s CAP Note securities, this dividend announcement reinforces the steady income profile of these hybrid instruments. The partial franking component adds a layer of tax efficiency, while the fixed margin over the BBSW benchmark rate offers a degree of protection against interest rate fluctuations. As the payment date approaches, investors will be watching closely to see if future distributions maintain this level or adjust in response to market conditions.
Bottom Line?
Macquarie’s steady dividend on its CAP Note signals confidence in its hybrid securities, but investors should watch for future rate adjustments.
Questions in the middle?
- Will Macquarie maintain or adjust the fixed margin on future CAP Note dividends?
- How might changes in the BBSW rate affect upcoming distributions?
- What impact will partial franking have on investor demand for these securities?
