CEO Jeff Sprecher and his Board of Directors at Intercontinental Exchange (ICE) recently dished us a 10% dividend increase; the shares now pay $0.33 each quarter versus $0.30 previously, observes income specialist Brett Owens, editor of Hidden Yields.
First-level income investors will see ICE’s 1%+ yield and yawn. But this is anything but a drowsy dividend — these pennies add up!
When ICE initiated its payout in 2014, shares paid a modest $0.13. Seven raises later, the stock’s cumulative 154% dividend growth has fueled a share price that has tripled over the last seven years.
Apathetic investors are also sleeping, missing Sprecher and his consistent innovation on the ICE platform. He founded the company as an energy trading platform two decades ago. In the coming years, he logically and gradually extended this initial technology:
• In 2007, ICE expanded from energy to all commodities by purchasing the New York Board of Trade (NYBOT).
• In 2013, Sprecher sprung for the ultimate stock platform, the NYSE.
• Four years ago, ICE added a bond offering.
• Three years ago, after identifying mortgages as the biggest dysfunctional financial problem left for them to solve, ICE acquired MERSCorp, which gave them a “touch point” on almost every US mortgage.
• And just last year, ICE purchased Ellie Mae, the leading digital mortgage lending platform, adding it on top of the mortgage technology they’ve been building.
As ICE’s platform extends, it rakes in more free cash flow (FCF). In the most recent quarter, the firm generated a record $2.4 billion in FCF and returned nearly $2 billion of it to shareholders via the quarterly dividend, the latest dividend raise and share buybacks. Sweet.
We’ve enjoyed double-digit gains of our own (+10%) in the six months we’ve held our ICE shares. The stock remains a good buy today, and I’m raising our buy price to reflect its higher dividend.
Action to Take: Buy Intercontinental Exchange up to $132.00.