Since many companies report their fourth-quarter results in January and February, recent weeks have seen the usual beginning-of-year flood of dividend raises.
Even in the financial sector, which isn't exactly stuffed with dividend payers, let alone raisers, we've already seen several hikes this young year. Reliable raisers Charles Schwab (SCHW +0.92%) and CME Group (CME +0.71%) both declared dividend raises, and each was nice and meaty. Let's take a closer look at both.
1. Charles Schwab
At the end of January, Charles Schwab injected a little warmth into the cold winter by declaring a dividend raise of 14% for its common stock. The new amount of the quarterly payout will be $0.25 per share.
That was the highest increase since the beginning of 2019, which is saying something because "Chuck" is a steady and reliable dividend payer and a frequent raiser. This decade has been somewhat of an anomaly for the company, as it froze dividend raises for over two years during the thick of the coronavirus pandemic. The three raises since then have been making up for lost time, in a sense.
Schwab has always been most readily identified as a securities brokerage, but in the recent past, it's morphed into a well-diversified financial services company. In 2022, securities trading was brisk even though the market often slumped; on top of that, the Federal Reserve's series of interest rate hikes made a host of financial instruments more attractive to investors, and Schwab benefited commensurately.
NYSE: SCHW
Key Data Points
Those dynamics, plus an assertive acquisition strategy -- most recently expressed in its deal for multigenerational wealth management company The Family Wealth Alliance -- have been very healthy for the finances. For 2022, Schwab booked its all-time high earnings-per-share figure on the back of net revenue that rose by 12% year over year – a very good showing for a business that's been around as long as it has.
So, as long as those financial markets show signs of life and Schwab keeps its ever-widening client base buying into its wide range of products, it should continue to perform well.
Schwab's newly raised dividend is to be handed out on March 1 to investors of record as of Feb. 14. At the most recent closing stock price, it would yield 1.3%.
2. CME Group
CME Group operates several venues where traders and investment managers at outfits like Schwab place money. The company owns and manages derivatives exchanges, such as the long-standing Chicago Mercantile Exchange (hence its initials) and the New York Mercantile Exchange.
As mentioned above, financial markets traded briskly (if not always bullishly) in 2022, and derivatives exchanges were no exception. Like Schwab, CME Group reaped the benefits of these rising fundamentals, which gave it the confidence to declare a 10% dividend raise to a quarterly rate of $1.10 per share.
Unlike Schwab, CME Group didn't go into hibernation mode with its dividend at any point in the recent past.
It has reliably boosted its payout once every year. Are you paying attention, dividend stock lovers? Since 2012, it has declared an annual variable dividend in December pegged to its financial performance during the year. The 2022 edition set a new high at $4.50 per share; previously, CME Group had paid out in a range of $0.60 to $3.50.
NASDAQ: CME
Key Data Points
We're just in front of CME Group's fourth-quarter and full-year 2022 earnings release, so we can't accurately gauge the company's performance for the year. But the indications we've gotten so far are rather encouraging -- in mid-January, it announced that it hit its all-time record for non-U.S. average daily volume (ADV), which was up by 15% over the 2021 figure to 6.3 million contracts.
ADV is a key operational metric in CME Group's business, and if it's on the rise, the financials are sure to follow. It also makes it likely that ADV on -- and the fundamentals of -- the company's crucial U.S. exchanges also headed north. We can imagine that trajectory continuing if the financial markets remain lively.
CME Group will dispense its next quarterly payout on March 27 to stockholders of record as of March 10. It would yield 2.5% at the stock's current level.
