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Cboe Global (CBOE) to Share More Profits, Ups Dividend by 14%

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In its concerted efforts to enhance shareholder value, the board of directors of Cboe Global Markets (CBOE - Free Report) approved a 14% hike in its dividend. This marked the 11th straight year of dividend hike. With this, the payout now stands at 48 cents per share compared with the earlier payout of 42 cents per share.

Based on the stock’s Aug 19 closing price of $127.62, the new dividend will yield 1.3%, better than the industry average of 1.1%. This makes Cboe Global an attractive pick for yield-seeking investors. Shareholders of record on Aug 31 will receive the increased dividend on Sep 15.

Cboe Global Markets enjoys strong liquidity position despite cash outlays to enhance operating leverage. Strong liquidity not only mitigates balance sheet risks but also paves the way for an accelerated capital deployment. As of Jun 30, 2021, cash and cash equivalents surged 83.7% from fourth-quarter 2020 end level. Moreover, cash flow from operations increased 47.8% year over year in the first half of 2021.

The company’s dividend witnessed an eight-year (2013-2021) CAGR of 15.6%.
Also, return on equity (ROE), a profitability measure of how efficiently a company utilizes its shareholders money, was 16.6% in the trailing twelve months, better than the industry average of 12.8%.

Besides regular dividend hike, Cboe Global Markets, one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading, remains committed to return excess cash to shareholders also through share repurchases.  From a capital return perspective, its strong cash flow generation enabled it to return $79 million to shareholders through dividends and share repurchases in the second quarter of 2021.

Moreover, since inception of the buyback program in 2011 through Jun 30, 2021, the company has bought back $1.2 billion worth shares and has $318.9 million remaining under its existing share repurchase authorization.

Shares of Cboe Global have rallied 39.2% in the past year, outperforming the industry’s increase of 23.4%. Expanding product line across asset classes, broadening geographic reach, diversifying business mix with recurring revenues and leveraging technology should help shares retain the momentum.

Zacks Investment Research
Image Source: Zacks Investment Research

Cboe Global currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the finance sector include OTC Markets Group Inc. (OTCM - Free Report) , Nasdaq, Inc. (NDAQ - Free Report) and Equifax, Inc. (EFX - Free Report) . While OTC Markets sports a Zacks Rank #1 (Strong Buy), Nasdaq and Equifax carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

OTC Markets surpassed estimates in each of the last four quarters, with the average surprise being 35.73%.

Nasdaq surpassed estimates in each of the last four quarters, with the average surprise being 9.21%.

Equifax surpassed estimates in each of the last four quarters, with the average surprise being 17.71%.

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