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S&P Global Has Great Dividend Growth Potential, But Valuation Ruins The Yield

Published Wed, 21 Oct 2020 10:22:01 -0400 on Seeking Alpha

Seeking AlphaS&P Global Has Great Dividend Growth Potential, But Valuation Ruins The YieldOct. 21, 2020 10:22 AM ET|| About: S&P Global Inc. (SPGI)by: Andrew CournoyerAndrew Cournoyer Long Only, Value, large-cap, Growth At Reasonable PriceSummaryS&P Global is a steady grower in the top and bottom lines.
Revenue earned is mostly from recurring and passive sources.
With a payout ratio of just 24% and 47 years of increasing dividend payments, the company has dividend income investment potential.
But, at the current price, the yield is minimal and does not offer a margin of safety.
Introduction
Are you an investor in the and S&P 500 or Dow Jones Index? Have you ever invested in a bond? If so, you will be very familiar with S&P Global (NYSE: SPGI), the company that created the indices and bond ratings you may have used. S&P Global is a leading provider of ratings, benchmarks, analytics, and data for the capital and commodity markets of the world. The company not only provides the familiar rating and indices but also provides market intelligence and data analytics to institutions and investors. S&P Global is a very stable company with a steady top and bottom line. The company has the potential to be a long-term hold with a growing dividend. But, as with any investment, I believe you should buy S&P Global on a dip as the valuation is a bit high right now and doesn't offer a high yield.
Financial History
Overview


Source: SEC 10-Ks
Over the past five years, S&P Global has had very stable revenues. The revenue growth rate per year has been 4.75%. This top-line growth has flowed down throughout the income statement. As can be seen, operating income and net income have also seen stable growth. Operating income grew at a clip of 11.08% per year. On the other hand, net income has seen a CAGR of 12.93%. As a note, the large increase in operating and net income in 2016 was attributable to dispositions. Most notably,... Read more