Well under water in the Macquarie DRP

A dour outlook statement and a patchy composition of its second-half profit -including a return on equity of only 17 per cent - saw the bank's shares fall by seven per cent yesterday to $61.25.

Investors in Macquarie in recent years are well under water. Macquarie Bank dividend reinvestment participants for the last three years paid an average of $67.25 for new shares in the bank, eleven per cent higher than yesterday's close.

Participants, predominately retail investors, have reinvested their dividends at a price ranging from $51.27 to $84.44 over the last six dividend periods, with the 2008 final dividend to be calculated in the five trading days beginning 30 May.

The Macquarie final dividend of $2.00 per share brings the full year return to $3.45 fully franked.

The $549 million paid to shareholders represents a payout ratio of 52.2 per cent, down 2.1 percentage points from a year earlier, paid from retained profits as at 31 March 2008.

Further retail investor pain will be felt by participants in the 2007 share purchase plan at $87, allowing investors to either purchase 28 or 57 shares, (the 2.5 per cent discount applicable to the DRP did not apply to the share purchase plan).

This investment has now lost over a quarter of the capital value, with institutional investors not being spared if they decided to participate in the 2007 $750 million capital raising at $87.

Macquarie Group shares are currently trading well above the twelve-month lows of $43, but still well below the $97 peak shortly after the 2007 final results, where investors in the dividend reinvestment and capital raising were pleased with their rapid $10 per share paper gains.