Macquarie’s Partial Franking Raises Questions on Future Dividend Stability

Macquarie Group’s Scheduled Dividend Announcement

Macquarie Group Limited has confirmed a forthcoming ordinary dividend payment on its CAP NOTE 3-BBSW+4.15% PERP NON-CUM RED T-09-26 securities, commonly referred to by the ASX code MQGPD. The dividend amount is AUD 1.6883 per security, with the payment scheduled for 10 March 2026. Investors holding these capital notes will see the dividend credited following the ex-date of 27 February 2026 and the record date of 2 March 2026.

Understanding the Dividend Components

This distribution is partially franked at 35%, meaning a portion of the dividend carries a tax credit reflecting corporate tax already paid by Macquarie. Specifically, AUD 0.5909 of the dividend per security is franked, while the remainder is unfranked. The franking credits can be valuable for Australian resident investors, potentially reducing their tax liabilities on this income.

The dividend relates to a 90-day payment period ending 9 March 2026. The total distribution rate is calculated at 6.8469% per annum, derived from the 90-day Bank Bill Swap Rate (BBSW) mid-rate on the first day of the period plus a fixed margin of 4.15%. This rate is adjusted to account for the franking component, reflecting Macquarie’s approach to balancing investor returns with tax efficiency.

Implications for Investors and Market Context

Macquarie’s capital notes are a hybrid security, blending features of debt and equity, and are a popular choice for investors seeking steady income streams with some exposure to the bank’s credit profile. The announced dividend maintains consistency with prior distributions, suggesting stable earnings and confidence in ongoing cash flow generation.

Given the fixed margin and the linkage to the BBSW rate, the yield on these notes will fluctuate with market interest rates, providing a degree of inflation protection. The partial franking adds an additional layer of appeal for tax-sensitive investors. Market participants will be watching for any shifts in future dividend rates or franking percentages as indicators of Macquarie’s financial health and regulatory environment.

Looking Ahead

As the payment date approaches, investors should ensure their holdings are recorded by the record date to qualify for the dividend. Analysts will likely update yield models to reflect this distribution and monitor Macquarie’s subsequent announcements for any changes in capital management strategy or market conditions that could impact future payments.