Earlier this week, the board of directors of
CBOE Holdings Inc.
) announced a special cash dividend of 75 cents per share payable
on Dec 28, 2012 to shareholders of record as of Dec 21, 2012.
This implies a dividend yield of 2.5%, based on the company's
closing share price of $30.00 as of Dec 13, 2012.
CBOE expects a cash outlay of about $66.6 million for the
dividend payment, considering the number of shares outstanding at
present. The company will use its cash-in-hand to pay the
This will substantially reduce CBOE's cash and cash
equivalents, which stood at $160.3 million as of Sep 30, 2012.
However, the company generated operating cash flow of $140.87
million during the first nine months of 2012, which is sufficient
to cover the expenditure for the special dividend.
The strong cash flows generated by CBOE along with the absence
of debt have resulted in a sturdy balance sheet and abundant free
cash. Consequently, the company strives to regularly return the
excess capital to shareholders through dividends and share
repurchases, apart from investing in business.
In addition to this special dividend, CBOE declared a regular
quarterly dividend on Oct 30, 2012. This cash dividend of 15
cents per share (for the fourth quarter of 2012) will be paid on
Dec 21, 2012 to shareholders of record as of Nov 30, 2012.
Apart from dividend payments, CBOE used its excess capital for
share buybacks. The company repurchased 1.87 million shares at an
average price of $26.58 per share up to Nov 1 this year. This
involved a cash outlay of $49.7 million. As of Sep 30, 2012,
outstanding balance in the company's share repurchase program
stood at $103.3 million.
Other exchanges, such as
Nasdaq OMX Group Inc.
NYSE Euronext Inc.
) also regularly deploy capital via share repurchases and
dividend payments. Currently, CBOE carries a Zacks #3 Rank
(Hold). We maintain a long-term 'Neutral' recommendation on the
CBOE HOLDINGS (CBOE): Free Stock Analysis
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis
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