In its concerted efforts to enhance shareholder value, the board of directors of Nasdaq, Inc. NDAQ has recently hiked its quarterly dividend by 16%. The new dividend payout amounts to 44 cents per share compared with 38 cents paid earlier. Shareholders of record as of Jun 15 are expected to get the dividend on Jun 29.
The annualized dividend of $1.76 yields 2.1%, based on the closing price of $83.49 as of Mar 28. This is better than the yield of 1.5% for the Zacks Securities Exchange industry. The recent dividend raise marks the fourth straight increase by the company at a four-year CAGR of 35.6%.
Nasdaq boasts a healthy balance sheet and a strong cash position but modest operating cash flow from its diverse business model. A solid financial position ensures shareholder-friendly moves like higher dividend rates and share repurchases.
Despite completing several acquisitions, Nasdaq returned almost $446 million in capital to shareholders in 2017 through dividends and repurchases, constituting 65% of its non-GAAP income. Based on 196.7 million shares outstanding at 2017-end, the company is likely to pay about $86.5 million in dividend annually.
Nasdaq had $226 million remained outstanding under its authorized share buyback program as of Dec 31, 2017. Also, the company is authorized to repurchase shares worth $500 million. Nasdaq’s consistent endeavors to improve shareholders’ value make this stock an attractive pick for yield-seeking investors. The company remains committed to deploy capital effectively by de-leveraging, investing in organic growth initiatives, pursuing strategic acquisitions, increasing dividend and engaging in buybacks.
Shares of Nasdaq have gained 9.2%, outperforming the industry’s 4.4% increase. Strategic expansions, improved trading volume and efforts to accelerate the company’s non-transaction revenue base should continue to drive the shares higher.
Zacks Rank & Stocks to Consider
Nasdaq carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the finance sector are AllianceBernstein Holding L.P. AB, American Equity Investment Life Holding Company AEL and American Financial Group, Inc. AFG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Investment manager AllianceBernstein provides research services to its clients. The company came up with an average four-quarter positive earnings surprise of 8.54%.
American Equity Investment provides life insurance products and services in the United States. The company delivered an average four-quarter beat of 27.23%.
American Financial provides property and casualty insurance products in the United States. The company pulled off an average four-quarter positive surprise of 26.31%.
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