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CBOE Holdings OKs Special Div, Buyback

Zacks Equity Research

In its consistent effort to share more profit with the company’s shareholders, the board of directors of CBOE Holdings Inc. (CBOE) has approved a special dividend of 50 cents per share.

The special dividend was primarily supported by the company’s sturdy financial position. Previously, CBOE Holdings had paid a special dividend of 75 cents per share in Dec 2012. Additionally, the company has been engaged in delivering regular quarterly dividends to its shareholders for the last several years.

CBOE Holdings has built a solid capital base and cash flow on the back of strong investing and disciplined operational activities. Moreover, the company’s continued focus on expanding its business, new products and services continues to boost its capital base.

The company exited the third quarter of 2013 with strong cash balance of $226.4 million, which surged 66.9% from 2012-end level. Retained earnings stood solid at of $362.8 million as of Sep 30, 2013 soared 31.7% from the 2012-end level.

Based on approximately 87 million shares outstanding as of Dec 9, 2013, CBOE Holdings will have to dish out roughly $43.5 million for the special dividend payments. Its sufficient liquidity will comfortably cushion the payout.

CBOE Holdings will pay the special dividend on Jan 17, 2014, to stockholders of record as of Jan 3, 2014.

On Dec 20, 2013, the company will also pay 18 cents per share of quarterly dividend to shareholders of record as of Nov 29, 2013. Based on the share price of $51.39 as of Dec 10, the quarterly dividend of CBOE Holdings currently yields at 1.40%. This yield is better than that of peer securities exchange, MarketAxess Holdings Inc. (MKTX) (yield of 0.79%) as well as the industry yield of 1.33%.

In order to further enhance its shareholders’ value, the board of directors of CBOE Holdings approved a new share repurchase program authorizing the company to buyback $100 million of its outstanding common stock. This new authorization will include the remaining unused amount under the previous authorization. Now, the total amount available for stock repurchases is nearly $167 million as of Dec 9, 2013.

During the third quarter of 2013, $14 million of shares were repurchased by CBOE Holdings. This was reflected in the strong third-quarter results and is expected to boost the same in the upcoming quarters as well.

CBOE Holdings has consistently enhanced shareholders’ value in the last few years through share repurchase activities and dividend payments, thereby boosting investors’ confidence. These efforts also attract new investors for the company. The company has returned more than $62 million to its shareholders in the first nine months of 2013.

CBOE Holdings presently carries a Zacks Rank #3 (Hold). However, better-ranked stocks in the same sector include IntercontinentalExchange Group Inc. (ICE) and The Nasdaq OMX Group Inc. (NDAQ), each sporting a Zacks Rank #2 (Buy).

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Read the Full Research Report on NDAQ
Read the Full Research Report on MKTX

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