Despite high debt leverage, the board of
Nasdaq OMX Group Inc.
) announced a 15% hike in its regular dividend pay-out. This
marks the first ascent since the companyinitiated cash dividends
in Apr 2012.
Accordingly, the raised dividend per share of 15 cents, up
from prior 13 cents, will be paid on June 27, 2014, to
shareholders of record as on Jun 13. The hike also expanded the
annual dividend to 60 cents a share from the prior 52 cents.
Based on Thursday's closing price of $37.14, the raised dividend
generates a dividend yield of 1.62%.
Balanced Risk-Reward Profile
Given the ongoing economic volatility that has been
pressurizing the top- and bottom line of most exchanges, the
current hike appears commendable and optimistic. Moreover, Nasdaq
returned $1.19 billion via share repurchases since Jan 2010.
Although share repurchases remained minimal in 2013 due to
increased debt obligations, we believe that consistent reductions
in expenses and prudent capital managementshould support the
bottom line, improve cash flow and accelerate capital deployment.
The company had $215 million of stock available for share
buybacks at the end of 2013.
Meanwhile, Nasdaq is aggressively focused on improving
fundamentals and operating leverage through acquisitions,
proactive market expansion and product diversification
initiatives. These efforts also enable the company to enter new
markets oon a low cost and highly flexible platform, thereby
creating additional sales opportunities in the long run.
While the Zacks Consensus Estimate for 2014 and 2015 remained
intact in the last 30 days, at $2.99 and $3.43 per share, these
are expected to rise 15.1% and 14.5%, respectively, on a
Moreover, the Most Accurate Estimate for Nasdaq's 2014 and
2015 earnings stands at $3.07 and $3.64 a share, resulting in an
of +2.7% and +6.1%, respectively.
While Nasdaq carries a Zacks Rank #3 (Hold), some
better-ranked financial stocks include
General Finance Corp.
Portfolio Recovery Associates Inc.
Global Payments Inc.
). All these stocks bear a Zacks Rank #2 (Buy).
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