U.S. markets close in 1 hour 9 minutes
  • S&P 500

    -0.49 (-0.01%)
  • Dow 30

    +11.75 (+0.04%)
  • Nasdaq

    +9.50 (+0.07%)
  • Russell 2000

    -3.45 (-0.16%)
  • Crude Oil

    -0.20 (-0.38%)
  • Gold

    -5.80 (-0.31%)
  • Silver

    +0.00 (+0.00%)

    +0.0027 (+0.22%)
  • 10-Yr Bond

    +0.0050 (+0.48%)

    +0.0057 (+0.42%)

    -0.1090 (-0.11%)

    +194.29 (+0.61%)
  • CMC Crypto 200

    +3.65 (+0.56%)
  • FTSE 100

    +15.16 (+0.23%)
  • Nikkei 225

    -276.11 (-0.96%)

CME Group Inc. (NASDAQ:CME) Passed Our Checks, And It's About To Pay A US$2.50 Dividend

Simply Wall St
·3 min read

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that CME Group Inc. (NASDAQ:CME) is about to go ex-dividend in just 3 days. You can purchase shares before the 24th of December in order to receive the dividend, which the company will pay on the 13th of January.

CME Group's next dividend payment will be US$2.50 per share. Last year, in total, the company distributed US$5.90 to shareholders. Based on the last year's worth of payments, CME Group stock has a trailing yield of around 3.2% on the current share price of $183.98. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for CME Group

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. CME Group is paying out an acceptable 55% of its profit, a common payout level among most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.


Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, CME Group's earnings per share have been growing at 12% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, CME Group has increased its dividend at approximately 20% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Has CME Group got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and CME Group is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, CME Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while CME Group has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 2 warning signs for CME Group you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.