Intercontinental Exchange Inc's Dividend Analysis
An In-Depth Look at ICE's Dividend Sustainability and Growth
Intercontinental Exchange Inc (NYSE:ICE) recently announced a dividend of $0.45 per share, payable on 2024-03-29, with the ex-dividend date set for 2024-03-14. 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 look into Intercontinental Exchange Inc's dividend performance and assess its sustainability.
What Does Intercontinental Exchange Inc Do?
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Intercontinental Exchange is a vertically integrated operator of financial exchanges and provides ancillary data products. Though the company is probably best known for its ownership of the New York Stock Exchange, which it acquired in 2013, ICE operates a large derivatives exchange, too. The company's largest commodity futures product is the ICE Brent crude futures contract. In addition to the exchanges business, which is about 56% of net revenue, Intercontinental Exchange has used a series of acquisitions to create its mortgage technology business (15% of net revenue) and fixed-income and data services segment (29% of net revenue).
A Glimpse at Intercontinental Exchange Inc's Dividend History
Intercontinental Exchange Inc has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. Intercontinental Exchange Inc has increased its dividend each year since 2013. 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. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Intercontinental Exchange Inc's Dividend Yield and Growth
As of today, Intercontinental Exchange Inc currently has a 12-month trailing dividend yield of 1.23% and a 12-month forward dividend yield of 1.31%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Intercontinental Exchange Inc's annual dividend growth rate was 11.90%. Extended to a five-year horizon, this rate decreased to 11.70% per year. And over the past decade, Intercontinental Exchange Inc's annual dividends per share growth rate stands at an impressive 21.00%.
Based on Intercontinental Exchange Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Intercontinental Exchange Inc stock as of today is approximately 2.14%.
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 2023-12-31, Intercontinental Exchange Inc's dividend payout ratio is 0.30.
Intercontinental Exchange Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Intercontinental Exchange Inc's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each 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. Intercontinental Exchange 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 Intercontinental Exchange Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Intercontinental Exchange Inc's revenue has increased by approximately 5.70% per year on average, a rate that underperforms than approximately 51.26% 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, Intercontinental Exchange Inc's earnings increased by approximately 8.40% per year on average, a rate that underperforms than approximately 53.33% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.20%, which underperforms than approximately 52.42% of global competitors.
Next Steps
In conclusion, Intercontinental Exchange Inc's history of consistent and growing dividends, coupled with a reasonable payout ratio and strong profitability rank, paints a positive picture for dividend sustainability. However, growth metrics present a mixed outlook with certain areas underperforming relative to peers. Value investors should weigh these factors alongside their investment strategy and consider the stability and potential growth of ICE's dividends. For those seeking additional high-dividend opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
