Exploring the Dividend Yield, Growth, and Sustainability of Nasdaq Inc (NDAQ, Financial)
Nasdaq Inc(NDAQ) recently announced a dividend of $0.22 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Nasdaq Inc's dividend performance and assess its sustainability.
What Does Nasdaq Inc Do?
Founded in 1971, Nasdaq is primarily known for its equity exchange, but in addition to its market-services business (about 35% of sales), the company sells and distributes market data as well as offers Nasdaq-branded indexes to asset managers and investors through its information-services segment (30%). Nasdaq's corporate-services business (20%) offers listing services and related investor relations products to publicly traded companies and through the company's market technology group (15%), Nasdaq facilitates the exchange operations of other exchanges throughout the world and provides financial compliance services.
A Glimpse at Nasdaq Inc's Dividend History
Nasdaq Inc has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. Nasdaq Inc has increased its dividend each year since 2012. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 11 years.
Breaking Down Nasdaq Inc's Dividend Yield and Growth
As of today, Nasdaq Inc currently has a 12-month trailing dividend yield of 1.60% and a 12-month forward dividend yield of 1.73%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Nasdaq Inc's annual dividend growth rate was 8.10%. Extended to a five-year horizon, this rate increased to 9.10% per year. And over the past decade, Nasdaq Inc's annual dividends per share growth rate stands at an impressive 19.90%.
Based on Nasdaq Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Nasdaq Inc stock as of today is approximately 2.47%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Nasdaq Inc's dividend payout ratio is 0.37.
Nasdaq Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nasdaq Inc's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Nasdaq Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Nasdaq Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nasdaq Inc's revenue has increased by approximately 13.70% per year on average, a rate that outperforms than approximately 63% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Nasdaq Inc's earnings increased by approximately 13.60% per year on average, a rate that outperforms than approximately 51.99% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 16.40%, which outperforms than approximately 59.67% of global competitors.
Next Steps
In conclusion, Nasdaq Inc's consistent dividend payment record, impressive growth rates, and sustainable payout ratio, coupled with high profitability and strong growth metrics, make it an attractive prospect for value investors seeking regular income. However, investors should always conduct thorough research and consider the overall financial health of the company before making investment decisions.
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