CME has announced their special dividend/annual variable dividend for 2018 in the amount of $3.50 per share.  The 2018 special dividend in $0.25 higher than last year.  This marks the 5th straight year of having a special dividend and 8 special dividends in the 11 years the company started paying special dividends.  Pretty good stuff.  The current yield on CME (not factoring in the special dividend) is 1.76% based on the 12/14 closing price of $150.42.  If we factor in the special dividend and the regular quarterly dividend of $0.66, we suddenly have a dividend yield of 4.08%.  Today is just about the special dividend, but I am projecting a 4 cent hike to the quarterly dividend as well, during Q1.

Lets take a look at the special dividend history:

Remember, the special/variable dividend is an added bonus to the stock.  However, we can see the growth has been quite impressive in 11 years.  This company is a dividend machine.

CME vs S&P500

So dividends are nice and all, as they provide a way for an early retiree with cash flows to live off, but how does the stock compare vs the S&P500 for the all important capital appreciation.

If I go back to when CME IPO’d, we see it had a miraculous run, followed by a crash with the markets in ’08, and then it was like nothing happened.  So yeah, lots of growth here.  The interesting thing too, they have new derivatives coming out that can be traded quite frequently, so this leads to additional streams of revenue to profit from.  With all the talk of bitcoin, there are also derivatives that have started to trade as well.   As the fever and media pump up the frenzy of bitcoin, that should benefit CME and CBOE as well as interest can turn to protecting profits in bitcoin or even speculating around price fluctuations.

Key Stats

Market Cap: $51.19 Billion

Dividend Yield: 1.76% (without special dividend)

Beta: 0.84

Profit Margin: 40.94%

Payout Ratio: 58.5%

Total Cash: $1.72 Billion

Total Debt: $2.23 Billion

I absolutely love this stock. Great margins, a specialized exchange, room for the dividend to grow, and a very shareholder friendly dividend policy.  I’ve said it before, I still think a buyout of CBOE would make sense for CME to do.

Conclusion

With that said, I like CME as a long term holding.  It offers a growing marking in specialty regulated derivatives, compared to slow to low growth of your traditional stock exchanges.  If you really want an opportunity though, I’ve really like CBOE for a long time now.  Eventually CBOE should get gobbled up by CME.  It’s a matter of time.

Follow me on the social medias:

• 
• 
• 
• 
• 
•