The S&P Global (SPGI) provides autonomous ratings, yardsticks, analytics, and data to the capital and commodity markets all-inclusive. Revenue for the company has risen over the years through fiscal 2016. The growth in fiscal 2016 was driven by all the segments; namely, ratings, market and commodities intelligence, and indexes. The rise in US bank loan ratings and corporate bond rating revenues was triggered by refinancing activity due to the low interest rate environment in 2016. The enhancement of high-yield corporate issuance volumes in the second half of 2016 was driven by narrowing credit spreads.
Operating profits recorded stupendous growth due to a gain on dispositions. EPS (earnings per share) growth followed suit despite higher interest expenses. EPS was also influenced by share buybacks.
Revenues for the first half of 2017 rose, driven by all the segments. The top-line growth and lower operating expenses contributed to operating income growth.
In the graph below, we can see the S&P Global’s dividend yield compared to the S&P 500 and Equifax (EFX). (The asterisk in the graph denotes an approximation in calculating dividend yield.)
Annual increase in dividends for 44 years
The S&P Global has increased its dividends annually for at least the last 44 years. Free cash flow improved substantially in 2016 due to the gain on dispositions. Its dividend yield has fallen over the years and is below the S&P 500.
The company’s PE (price-to-earnings) ratio of 18.9x compares to a sector average of 25.1x. The dividend yield of 1.1% compares to a sector average of 3.2%. In the graph below, we can see the S&P Global’s price movement compared to the S&P 500 and Equifax.
Market and commodities intelligence advanced from organic revenue growth and synergies associated with the integration of SNL Financial, an international provider of news, data, and analytical tools. PIRA and RigData were acquired in 2016 to strengthen market and commodities intelligence’s energy analytical abilities.
The ProShares S&P 500 Dividend Aristocrats (NOBL) offers a dividend yield of 1.9% at a PE ratio of 21.0x. The diversified ETF has a substantial exposure to consumer non-cyclical. The SPDR S&P International Dividend ETF (DWX) offers a dividend yield of 5.0% at a PE ratio of 15.9x. The geographically diversified ETF has a substantial exposure to financials.