I am continually searching for attractively valued high-quality companies in which I can invest. In August 2018, I delved into the historical financial results and earnings guidance of CME Group Inc. (CME). Based on my analysis I came to the realization that CME Group is a unique dividend gem and disclosed that I would be initiating a position in one of the 'Side' accounts within the FFJ Portfolio; I acquired 300 shares.
Subsequent to that August 2018 purchase, CME's share price ran away on me. I put the acquisition of additional CME shares on the backburner with the intent of acquiring additional shares if CME's valuation retraced to an attractive level. Over the next ~2 years, I acquired shares in other companies when CME once again became attractively valued. In June 2020, however, CME's valuation retraced to an attractive level; I acquired another 300 shares for one of the 'Core' accounts within the FFJ Portfolio.
Investors who invest on the basis of a '2% or greater dividend yield' metric within stock screeners may wonder what I find so appealing about CME. After all, stock screeners currently reflect a ~1.74% dividend yield.
This is where stock screeners fail investors!
CME has a unique dividend policy in which it distributes a quarterly dividend AND an annual 'special' dividend; CME instituted a variable dividend policy in 2012 in which it sweeps excess cash to shareholders in mid-January.
Looking at CME's dividend history, the 'special' dividend is unpredictable. Nevertheless, we see that the 'special' dividend is reasonably close to the sum of the prior year's quarterly dividend payments following the implementation of the variable component of the company's dividend policy.
If CME's dividend policy sounds intriguing, I invite you to read my guest post at Dividend Power.
I wish you much success on your journey to financial freedom.
Thanks for reading!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclaimer: I do not know your individual circumstances and am not providing individualized advice or recommendations. You should not make any investment decision without conducting your own research and due diligence.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with the company mentioned in this article.
Disclosure: I and long CME Group in both the 'Core' and 'Side' segments of my FFJ Portfolio.
