In the current investing landscape, where surging market volatility has left investors on edge, the "Dividend Kings" stand out as pillars of stability. These stocks have weathered decades of change and have consistently rewarded their shareholders with increasing dividends for over 50 consecutive years – a testament to their resilience. These companies offer stability through various business cycles and steady earnings growth, making them prized assets in any portfolio.
New York-based capital markets giant S&P Global Inc. (SPGI) belongs to this elite club. Since 1937, SPGI has delivered dividends year after year, carving out its place as one of fewer than 30 companies in the S&P 500 Index ($SPX) to boast such a rich history of dividend growth.
And unlike some other dividend stocks, SPGI has surged by double digits over the past year, and Wall Street analysts are buzzing with optimism following its Q2 earnings beat. For investors seeking a blend of growth and income, this dividend-paying stock could be a smart portfolio addition right now.
About S&P Global Stock
S&P Global Inc. (SPGI), a powerhouse in financial intelligence, has been shaping markets since its founding in 1860. With a market cap of around $155.8 billion, the company offers a wide array of services, like credit ratings, benchmarks, analytics, and workflow solutions across diverse sectors like capital markets, commodities, and automotive.
With segments like S&P Global Ratings, S&P Dow Jones Indices, and S&P Global Mobility, it remains a pivotal player in providing crucial insights and data to investors, businesses, and industries worldwide.
Shares of the market data provider have surged 31.7% over the past 52 weeks and 17.5% over the past six months, outperforming its own benchmark S&P 500 Index's 27.6% and 13.2% returns, respectively.
Priced at 34 times earnings and 12.42 times sales, S&P Global trades at a discount to its closest peers, such as Moody's Corp (MCO). For a financial powerhouse hitting its stride, these numbers signal a potential buying opportunity in SPGI.
S&P Global Beats Q2 Earnings Projections
The company reported solid fiscal Q2 earnings results on July 30, smashing past Wall Street’s forecasts. Its total revenue rose 14.5% annually to $3.6 billion, beating estimates by 3.9% on strength in the Ratings Division and the successful integration of IHS Markit. Its adjusted EPS climbed 30% year over year to $4.04, topping the analyst consensus by 10.1%. This was driven by a combination of its strong revenue growth, margin expansion of 450 basis points, and a 2% reduction in fully diluted share count.
S&P Global exited the quarter with cash, cash equivalents and restricted cash of $2 billion, compared with $1.3 billion as of Dec. 31, 2023, while long-term debt amounted to $11.4 billion. Plus, the company generated $2.5 billion in cash from operating activities for the first half of 2024.
Looking ahead, management raised its fiscal 2024 adjusted EPS guidance to a range between $14.35 and $14.60, up from a previous forecast of $13.85 to $14.10. Revenue growth is projected between 8% and 10%. The company also boosted its adjusted free cash flow projection to $4.7 billion, and plans to return 85% of that to shareholders through dividends and buybacks, underscoring its commitment to delivering value to the shareholders.
Analysts tracking S&P Global predict EPS of $14.58 in fiscal 2024, up 15.7% annually, with the bottom line projected to surge another 11% to $16.19 in fiscal 2025.
S&P Global’s Legacy of Dividends
S&P Global is not just a dominant brand name in capital markets, but a go-to pick for passive income investors. Crowned as a “Dividend King,” this giant has rewarded its shareholders with annual dividend increases for five consecutive decades.
On June 25, S&P Global declared a Q3 dividend of $0.91 per share, payable to its shareholders on Sept. 11. SPGI offers an annualized dividend of $3.64 per share, translating to a yield of 0.73%.
The payout ratio stands at a comfortable 25.07%, showing S&P Global’s commitment to keeping its investors happy while continuing to expand and invest in the business.
What Do Analysts Expect for S&P Global Stock?
After its stellar Q2 earnings report, SPGI caught the eye of multiple brokerage firms. On July 31, Barclays analyst Manav Patnaik raised the stock’s price target to $550 from $520, while keeping an “Overweight” rating.
Stifel analyst Shlomo Rosenbaum increased SPGI’s price target to $540 from $535, describing the quarter as "generally solid overall." Furthermore, JP Morgan’s (JPM) Andrew Steinerman raised the stock’s target to $565, while RBC Capital’s Ashish Sabadra issued a price-target hike of 10.4% to $552.
SPGI stock has a consensus “Strong Buy” rating overall. Among the 19 analysts covering the stock, 16 suggest a “Strong Buy,” and three advise a “Moderate Buy.”
The mean price target for SPGI is $549.41, indicating an upside potential of 10.2% from current levels. The Street-high target price of $575, set by Wells Fargo (WFC) last week, implies that the stock could rally as much as 15.3%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
