Dividend Increase | CME Group $CME #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks CME Group for another dividend increase!

There's an old Chinese proverb that says "the best time to plant a tree was 20 years ago, the next best time is now".  The reason for this is that it takes time for a tree to grow and prosper and for you to start reaping its benefits.  Dividend growth investing is much the same way.  It takes consistent saving and investing as well as time and patience to let the power of dividend growth take hold.

That's why one of my favorite things is when one of the companies I own decides to pay out more in dividends.  You mean I get a pay raise just for owning a small piece of a company?  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  

On February 8th the Board of Directors at CME Group (CME) announced an increase to their quarterly dividend payment.  The dividend was increased from $1.10 to $1.15 which is an okay 4.6% increase.  Shares currently yield 2.17% based on the new annualized payout.

The new dividend rate will be payable March 26th to shareholders of record as of March 8th.

Since I own 29.725 shares of CME Group in my FI Portfolio, this raise increased my forward 12-month dividends by $5.94.  This is the 2nd raise I've received from CME Group since initiating a position in 2022 with the total organic dividend growth over that time coming to 15%.  

A full screen version of this chart can be found here.

CME Group is a Dividend Contender with 14 consecutive years of dividend growth.  CME Group has typically grown their dividend at a solid rate while also rewarding owners with hefty special dividends along the way. has been able to grow their dividend payment at a rapid pace over that time.  

Beginning in 2012, CME Group has paid out $33.71 in quarterly dividends while also paying out $35.90 in special dividends.

Since 2011, CME Group's year over year dividend growth has ranged from 0.4% to 60.0% with an average of 12.9% and a median of 8.6%.

There's been 12 rolling 3-year periods over that time with annualized dividend growth spanning from 3.7% to 25.1% with an average of 11.2% and a median of 9.5%.

Over that time there's also been 10 rolling 5-year periods with CME Group's annualized dividend growth landing between 8.1% to 16.8% with an average of 10.7% and median of 9.3%. 

The 1-, 3-, 5- and 10-year rolling dividend growth rates for CME Group since 2003 can be found in the following chart.  

A full screen version of this chart can be found here.

For dividend yield theory I consider the fair value range to be the forward dividend yield +/- 10% compared to the 3-year moving average, the under/over value area to be to between 10%-20% deviation from the average and significant over/under value are greater than a 20% deviation from the average.

A full screen version of this chart can be found here.

CME Group's 3-year average forward dividend yield is 2.0% which corresponds to a share price of $230 based on the new annualized payout.  

I consider the fair value range based on dividend yield theory to be the 3-year moving average yield +/- 10%.  That gives a fair value range of $209 - $256 and suggests that shares are currently trading on the lower end of fair value.

Wrap Up

This raise increased my forward dividends by $5.94 with zero effort on my part.  That's right, absolutely nothing to contribute to their operations.  Based on my FI Portfolio's current yield of 2.65% this raise is like I invested an extra $224 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way. 

That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

This is the 11th dividend increase I've received from the companies in my FI Portfolio.  Combined those raises have increased my forward 12-month dividends by $101.79.

My FI Portfolio's forward-12 month dividends are $12,245.59  Including my FolioFirst portfolio's forward dividends of $248.02 brings my total taxable accounts dividends to $12,493.61.  My Roth IRA's forward 12-month dividends are $1,246.88.  My Rollover IRA's forward dividends are $5,106.23.  Across all accounts I can expect to receive $18,846.72 in dividends over the next year.

I've also started compiling dividend data on many of the companies that I own or would like to own.  CME Group's can be found here which includes the dividend history (as far back as I can find without spending hours hunting it down), rolling dividend growth rates and dividend yield theory.  To see other companies that I've already gathered the data on you can check out the Dividend Companies page.  Check it out and let me know what you think.

Do you own shares of CME Group?  Do you like the exchange companies as investments?  

Please share your thoughts below.