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Nasdaq Inc's Dividend Analysis

Exploring the Sustainability and Growth of Nasdaq Inc's Dividends

Nasdaq Inc (NASDAQ:NDAQ) recently announced a dividend of $0.24 per share, payable on June 28, 2024, with the ex-dividend date set for June 14, 2024. 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 Nasdaq Inc's dividend performance and assess its sustainability.

What Does Nasdaq Inc Do?

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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.

Nasdaq Inc's Dividend Analysis
Nasdaq Inc's Dividend Analysis

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 12 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Nasdaq Inc's Dividend Analysis
Nasdaq Inc's Dividend Analysis

Breaking Down Nasdaq Inc's Dividend Yield and Growth

As of today, Nasdaq Inc currently has a 12-month trailing dividend yield of 1.48% and a 12-month forward dividend yield of 1.61%. 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 10.00%. Extended to a five-year horizon, this rate decreased to 8.50% per year. And over the past decade, Nasdaq Inc's annual dividends per share growth rate stands at an impressive 17.10%.

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 2.23%.

Nasdaq Inc's Dividend Analysis
Nasdaq Inc's Dividend Analysis

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 March 31, 2024, Nasdaq Inc's dividend payout ratio is 0.32.

Nasdaq Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nasdaq Inc's profitability 9 out of 10 as of March 31, 2024, 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. Nasdaq Inc's growth rank of 9 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 2.00% per year on average. 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 11.00% per year on average. Lastly, the company's 5-year EBITDA growth rate of 13.70%.

Conclusion

Considering Nasdaq Inc's consistent dividend payments, robust growth in dividend rates, manageable payout ratio, and solid profitability and growth metrics, the outlook for its dividend sustainability appears positive. Investors seeking to diversify their portfolio with a reliable dividend-paying stock might find Nasdaq Inc an attractive option. 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.