Last update on 2024-06-27

S&P Global (SPGI) - Dividend Analysis (Final Score: 6/8)

Analyze the performance and stability of S&P Global (SPGI) dividends based on an 8-criteria scoring system. Final Score: 6/8.

Short Analysis - Dividend Score: 6

We're running S&P Global (SPGI) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

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 is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is a critical indicator for income-focused investors. A higher yield suggests that investors receive a higher return on their investment. Comparing this yield to the industry average offers insight into how competitive the company's dividend is within its sector.

As of 2023, S&P Global (SPGI) has a dividend yield of 0.8172%, significantly lower than the industry average of 2.13%. Historically, SPGI's dividend yield has fluctuated, reaching a peak in 2012 at 6.4386% but consistently decreasing over the last decade. This downward trend is reflective of the significant stock price appreciation from $34.96 in 2003 to $440.52 in 2023. This suggests that while SPGI's dividend yield is low, the company's stock price growth might be compensating investors. Despite the lower yield relative to the industry, the increase in the stock price along with a rising dividend per share— from $0.54 in 2003 to $3.60 in 2023—indicates potential for capital returns combined with dividend growth. Hence, although the current yield is below the industry average, the total return profile should be taken into account when evaluating its attractiveness for investment.

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

The Dividend Growth Rate is a measure of future expectations and the stability of the company’s payout trend. It is important as it reflects the company's ability to increase its earnings and its commitment to rewarding shareholders.

Over the last 20 years, S&P Global (SPGI) has demonstrated an impressive average dividend growth rate of approximately 18.1%. This rate significantly surpasses the 5% benchmark, indicating a robust trend in increasing dividend payouts. Notably, the growth rate fluctuated considerably; for instance, in 2012, there was an extraordinary spike with a 252% increase, whereas in 2013 a significant drop of -68.18% was observed. Despite these fluctuations, the overall trend is notably positive, reflecting SPGI's strong earnings growth and consistent shareholder return policy. This is a good trend for long-term investors who rely on dividend payouts.

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

The payout ratio measures the proportion of earnings paid out as dividends to shareholders. For stability and sustainability, a ratio under 65% is preferable.

The average payout ratio for S&P Global over the last 20 years is approximately 24.51%, which is considerably below the 65% threshold. This indicates a conservative and potentially sustainable dividend policy, as the company retains a larger portion of its earnings for reinvestment and debt reduction. Additionally, the stable payout ratios (mostly within the range of 18% to 43%, except for the anomalies in 2012 and 2013) further reinforce the view of disciplined financial management. Overall, this trend is notably good for dividend sustainability.

Dividends Well Covered by Earnings?

dividends well covered by earnings

Observing the data given for S&P Global (SPGI), it is clear that their Earnings per Share (EPS) has shown considerable variation over the two decades, particularly notable in 2014 with a negative EPS of -0.4236. Typically, a company's EPS should be comfortably higher than the Dividends per Share (DPS) to ensure dividends are well covered by earnings, indicating that the company retains enough profit to sustain other expenses and growth. The dividend coverage ratio (DPS/EPS) fluctuates significantly here. Ideally, investors look for a coverage ratio above 2. However, for S&P Global, the ratios for several years fall short, with extreme lows in 2014 (-2.83) and highs (2.29 in 2012), indicating an unreliable trend and financial volatility. While SPGI seems capable of covering its dividends in recent years with ratios like 0.26 in 2020 and 0.32 in 2021, the overall historical inconsistency poses risk concerns.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow

The key concern here is ensuring that a company's dividend payments are well-covered by its free cash flow (FCF). Generally, when the Dividend Payout Ratio (dividend payout amount divided by free cash flow) is below 1, it indicates that the company has enough free cash flow to cover its dividend payments comfortably. The data reveals a mixed but generally positive picture for S&P Global (SPGI). Over recent years, the ratio of dividends covered by cash flow has remained significantly low which is favorable. Low dividend coverage maintains financial flexibility, avoiding over-leveraging risks. In spite of a spike in 2013 to 1.51 (indicating high payout relative to FCF), recent years show ratios below 0.5. Hence, S&P Global (SPGI) showcases robust financial health regarding their dividend sustainability which is favorable for investors.

Stable Dividends Since the Company Began Paying Dividends?

Stable Dividends Over the Past 20 Years. Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

The data indicates that S&P Global (SPGI) has exhibited a strong record of stable dividend payments over the past 20 years. Specifically, the dividend per share increased consistently from $0.54 in 2003 to $3.60 in 2023. Notably, there has not been a single year where the dividend per share dropped by more than 20%. For example, in 2012, the dividend per share took a significant jump to $3.52 from $1.00 in 2011 — this is an outlier due to stock split or similar events but irrelevant to the 20% drop criterion. Such a track record of stable and rising dividends is highly attractive to income-seeking investors as it ensures a reliable income stream, reducing reliance on market conditions.

Dividends Paid for Over 25 Years?

Paying dividends consistently for over 25 years is a strong indicator of a company's financial health and stability. It shows a commitment to returning value to shareholders.

S&P Global (SPGI) has demonstrated a strong commitment to returning value to its shareholders by paying consistent dividends for over 25 years. Examining the data from 1998 to 2023, we observe that SPGI's dividend per share has increased significantly, from $0.4875 in 1998 to $3.60 in 2023. This steady increase not only highlights the company's stable financial health but also reaffirms its strong earnings capability and prudent financial management. Such a trend is favorable for long-term investors who seek reliability and consistent income from their investments.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Over the past 20 years, S&P Global's number of shares outstanding decreased from 384,162,011 in 2003 to 318,400,000 in 2023, indicating several periods of stock repurchases. Evaluating the years 2005 to 2021, consistent buybacks occurred in 16 out of 20 years. However, a notable increase occurred recently in 2022 and 2023, which warrants further scrutiny. Reviewing an average repurchase rate of -0.6773 demonstrates a reduction in the total number of shares, suggesting a long-term trend of stock repurchases, which is indicative of returning value to shareholders. Recognizing consistent buybacks is favorable as it reduces share dilution and potentially boosts share prices. Yet, fluctuations in recent years need attention and further analysis to understand the company's strategic shifts. Thus, while historical data supports a strong buyback trend, recent aberrations could impact investor sentiment. Overall, stock repurchases by S&P Global have largely been beneficial.