Last update on 2024-06-28

Cboe Global Markets (C67.F) - Dividend Analysis (Final Score: 6/8)

Evaluate Cboe Global Markets (C67.F) dividend performance with a detailed 8-criteria scoring system. Learn why it scores 6/8!

Short Analysis - Dividend Score: 6

We're running Cboe Global Markets (C67.F) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

We reviewed Cboe Global Markets' (C67.F) dividend policy based on 8 criteria. First, the company's dividend yield is significantly lower than the industry average, which might disappoint income-focused investors but is a result of strong stock price growth. Second, its dividend growth rate has been higher than 5% annually over the last 20 years, indicating a positive trend. Third, the payout ratio averages around 22.46%, showcasing financial prudence. Fourth, dividends have been largely well-covered by earnings, especially post-2016. Fifth, the dividends are similarly well-covered by cash flows, supporting sustainability. However, coverage ratios show some inconsistencies. Sixth, dividends have not dropped by more than 20% any given year, speaking to their stability. Seventh, the company has yet to pay dividends for a full 25 years, having done so for 13 years so far. Finally, reliable stock repurchases over the past 20 years were examined to ensure capital allocation efficiency.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Cboe Global Markets (C67.F) seems like a reasonable investment for those prioritizing long-term growth and stable dividends. Though the dividend yield is lower than the industry average, the company exhibits strong financial health, consistent growth in dividends, and prudent payout ratios. Its stock price growth, dividends well-covered by earnings and cash flow, and stability make it worth considering. However, if you are primarily income-focused, the lower dividend yield might be a disadvantage. Further, while the company hasn't reached the 25-year dividend payment milestone, its positive trend and reliable stock repurchases add to its appeal. Overall, it is worth investigating further.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

dividend yield

Examining the dividend yield of Cboe Global Markets (C67.F), which currently stands at 1.1858%, we notice that it is significantly lower than the industry average of 2.13%. This reflects that the company's dividend payout, relative to its stock price, is less attractive for income-focused investors. Over the past 20 years, there has been noticeable volatility in the company's dividend yield, hitting a high of 4.4262% in 2012 and experiencing notable dips thereafter. Interestingly, despite rising dividend per share from 0.34 in 2011 to 2.1 in 2023, the yields have not matched industry trends partly due to significant increases in the stock price, which increased from $19.857 in 2011 to $160 in 2023. This upward trajectory in stock price indicates strong capital gains potential, but a relatively lower yield highlights the company's focus on growth and reinvestment over high dividend pay-outs. This mixed trend might be a downside for investors looking at it from a pure dividend yield perspective but could be appealing to those eyeing long-term capital appreciation.

Average annual Growth Rate higher than 5% in the last 20 years?

The Dividend Growth Rate is higher than 5% in the last 20 years?

The Dividend Growth Rate serves as a measure of the company's ability to increase its dividend payouts to shareholders over time. A consistent growth rate above 5% indicates that the company has a stable and growing dividend policy, which is generally a positive sign for investors.

Average annual Payout Ratio lower than 65% in the last 20 years?

The payout ratio indicates the proportion of earnings a company pays to shareholders in the form of dividends. A payout ratio under 65% suggests financial prudence and the potential for dividend sustainability and growth.

Analyzing the provided data, Cboe Global Markets demonstrates an average payout ratio of approximately 22.46% over the past 20 years. This ratio is significantly below the 65% benchmark, indicating a conservative approach to dividend payments. The sporadic increases in the payout ratio, particularly in 2022 reaching 88.65%, could signal temporary adjustments rather than a persistent trend. Overall, Cboe Global Markets maintains a robust and sustainable dividend policy, reflecting strong earnings retention for growth and financial flexibility. This trend is favorable for long-term investors seeking stable dividend income.

Dividends Well Covered by Earnings?

Dividends should be well covered by earnings to ensure that the company can sustain its dividend payments without compromising its financial stability.

From the data provided: - Earnings Per Share (EPS) started to positively appear from 2016 onwards, hitting values like 2.115 in 2016, peaking at 7.1966 in 2023. - Dividend Per Share (DPS) has been paid consistently from 2011, though with varying payouts each year. - The ratio of DPS covered by EPS is substantially important. For a company to be considered financially healthy with respect to its dividend policy, a good coverage ratio is preferable. Starting from zero coverage in 2011 to 2015, noticeable improvements were seen especially after 2016. For instance, in 2023, despite a coverage ratio of 0.2918 indicating that earnings cover nearly 29.18% of dividends paid, highest coverage in the recent years was witnessed in 2021 with a coverage of 0.8865 (about 88.65%). In the years 2020 onward, the ratios have shown relative stability. However, a ratio well below 1 indicates that a very minor part of the dividends paid is covered by earnings which could lead to reliability concerns over sustained dividend payments. Therefore, this trend shows inconsistent dividend coverage suggesting potential volatility in dividend payout sustainability. Continuous monitoring and evaluation of the firm's earnings against its paid dividends is essential for an informed investment decision especially for dividend-centric investors. Generally, seeing ratios significantly improve post-2016 adds positive perspective, yet the inconsistencies in some later years highlight areas needing attention.

Dividends Well Covered by Cash Flow?

Dividends covered by cash flow measure the proportion of free cash flow paid out as dividends. It is critical to assess a company's ability to sustain and grow dividends.

Cboe Global Markets shows a varying trend in the proportion of free cash flow used for dividend payments. The ratio started at 0% for years before 2017 and increased to a range between approximately 0.12 to 0.35 in the subsequent years. The 2023 ratio stands at around 0.22. Generally, a lower ratio indicates better coverage and more sustainable dividends. The company's current range is relatively healthy; however, observing ratios below 0.35 suggests cautious dividend management, ensuring they retain earnings for organic growth and other needs. This trend indicates prudent financial management, likely benefiting shareholder interests.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends are critical for income-seeking investors because they rely on consistent income streams for their financial needs. Dividends that do not drop by more than 20% indicate a reliable company.

Examining Cboe's dividend payments over the last two decades, it is evident that the company's dividends have not experienced a drop of more than 20% in any given year. The data shows a general upward trend, with the dividend per share starting at €0.34 in 2011 and reaching €2.10 in 2023. Despite some fluctuations, such as drops in 2013 and 2016, these declines are not significant enough to breach the 20% threshold. This stability is a positive sign for income-seeking investors, suggesting that Cboe is a reliable source of dividend income. The consistent increase in dividends further highlights the company's robust financial health and its commitment to shareholder returns.

Dividends Paid for Over 25 Years?

Consistently paying dividends for over 25 years reflects a company’s stability and long-term profitability. It’s an indicator of financial health and commitment to returning value to shareholders.

The provided data spans from 2011 to 2023, which totals 13 years of dividend payments. Cboe Global Markets (C67.F) has not yet achieved the 25-year threshold of continuous dividend payments. However, it’s worth noting the upward trend in the dividends per share, growing from €0.34 in 2011 to €2.1 in 2023. This demonstrates a strong and consistent increase in shareholder returns, indicating robust financial health and commitment to shareholder value. While the 25-year criterion is not met, the positive trend is certainly a good indicator of long-term stability and profitability.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

The concept of reliable stock repurchases entails a company consistently buying back its own shares over an extended period. This strategy often signals the company's confidence in its future profitability and can provide support to stock prices. It's important to scrutinize these buyback activities to assess the company's capital allocation efficiency and shareholder value enhancement.