Updated 3/6/25
Cboe Global Markets (CBOE) is a major player in the exchange world, known for its dominance in options and volatility products. It operates one of the largest options and futures trading platforms globally, with proprietary products like the VIX (Volatility Index) that traders and institutions rely on. Over the years, CBOE has expanded its reach through strategic acquisitions, strengthening its foothold in global markets.
For dividend investors, CBOE presents an intriguing opportunity. While its yield may not be the highest, its steady dividend growth, strong cash flow, and relatively low volatility make it a reliable long-term investment.
Key Dividend Metrics
📈 Forward Dividend Yield: 1.18%
💰 Annual Dividend Rate: $2.52 per share
📅 Ex-Dividend Date: February 28, 2025
🛡 Payout Ratio: 32.73%
📊 5-Year Average Dividend Yield: 1.44%
🚀 Dividend Growth Streak: 13 years
Dividend Overview
CBOE isn’t a high-yield stock, but what it offers is consistency. Its 1.18% yield may not excite income investors looking for hefty payouts, but the company has been steadily increasing its dividend for over a decade. More importantly, it does so responsibly, keeping its payout ratio at a conservative 32.73%.
The company generates strong cash flows, ensuring dividends are well-covered. With operating cash flow of over $1.1 billion in the last year, there’s no concern about the sustainability of its payouts. Unlike some financial stocks that ride economic cycles, CBOE benefits from market volatility, making it a unique dividend payer.
Recent Dividend Trends
- Quarterly dividend stands at $0.63 per share
- Annual dividend growth has been steady, reflecting strong financial health
- Low payout ratio leaves room for future increases
The stock’s yield is currently below its five-year average, but this is largely due to price appreciation rather than weak dividend growth.
Dividend Growth and Safety
CBOE’s dividend growth has been steady, even if not the most aggressive. Its ability to consistently raise payouts without overextending itself makes it a dependable income stock.
🔹 Dividend Growth Rate: Historically mid-to-high single-digit percentage increases
🔹 Dividend Safety: Backed by strong free cash flow and a manageable level of debt
One reason CBOE’s dividend remains secure is its strong position in options trading. As financial markets evolve, demand for derivative products continues to rise, driving revenue. Even with a recent decline in quarterly earnings (-7.3% year-over-year), the company’s return on equity remains solid at 18.5%, showing its profitability isn’t at risk.
Chart Analysis
Price Action and Trend
CBOE’s stock price has been in a clear uptrend since mid-2024, with a strong rally that started around late summer. The price action has been mostly bullish, staying above both the 50-day moving average (orange line) and the 200-day moving average (blue line) for a significant period.
There was a key turning point around August when the stock price broke above the 200-day moving average. This signaled a shift in momentum, and the stock continued higher, pushing well past previous resistance levels. Since then, the price has made a series of higher highs and higher lows, confirming the upward trend.
Right now, the stock is trading near its recent highs, closing at 213.00. The slight pullbacks over the past few months have found support near the 50-day moving average, which suggests that buyers are stepping in to defend those levels.
Moving Averages and Support Levels
The relationship between the 50-day and 200-day moving averages is a key signal of overall momentum. The 50-day crossed above the 200-day moving average several months ago, creating a golden cross pattern—a classic bullish signal. Since then, the stock has held above both moving averages, reinforcing the strength of the trend.
The 50-day moving average is currently acting as dynamic support, while the 200-day moving average sits further below, indicating a deeper level of potential support if a larger pullback occurs.
Volume and Buying Interest
Volume levels have been relatively steady, with occasional spikes during price breakouts and minor pullbacks. Notably, higher volume appeared during the strong rallies in late 2024, which confirms strong institutional participation.
Recent volume has been slightly lower compared to those earlier spikes, which could indicate a period of consolidation rather than aggressive buying. However, the price has still managed to hold near its highs, suggesting there is no major selling pressure either.
Relative Strength Index (RSI) and Momentum
The RSI indicator at the bottom of the chart shows that the stock has been in strong momentum territory for most of its rally, with occasional dips that allowed for price consolidation. The RSI remains elevated but not in extreme overbought territory, which means there’s still room for the price to move higher without being overly stretched.
A drop in RSI to the mid-range levels in early 2025 coincided with a minor pullback, but the stock quickly rebounded. The fact that RSI has stabilized near neutral levels suggests that buyers are still in control, but momentum isn’t as aggressive as it was in previous months.
Recent Candlestick Action
The last five candles show some indecision in price movement. There were attempts to push higher, but upper wicks suggest sellers stepped in at resistance levels around 215. The lower wicks on several recent candles indicate that buyers are still present and defending lower prices, preventing a deeper drop.
The last session saw a small gain, closing near the highs of the day, but the presence of a wick on top suggests some hesitation. If buyers continue to step in, a breakout past recent highs could set the stage for another leg up. However, if the stock struggles to hold above 213, a pullback toward the 50-day moving average could be the next test of support.
Analyst Ratings
Cboe Global Markets (CBOE) has recently seen both upgrades and downgrades from analysts, reflecting differing views on its financial health and future prospects. While some see strong upside potential, others remain cautious due to valuation concerns and broader market conditions.
Upgrades
📈 Deutsche Bank Upgrade: On November 11, 2024, Deutsche Bank analyst Brian Bedell upgraded CBOE from Hold to Strong Buy, increasing the price target from $212 to $222. The decision was driven by the company’s strong revenue growth, improved operational efficiency, and positive trends in options trading volumes.
📈 Oppenheimer Raises Target: On October 14, 2024, Oppenheimer analyst Owen Lau maintained an Outperform rating on CBOE while raising the price target from $209 to $227. The firm cited strong earnings momentum, expansion in global derivatives markets, and the company’s ability to capitalize on increased trading activity.
Downgrades
📉 J.P. Morgan Downgrade: On January 7, 2025, J.P. Morgan analyst Kenneth Worthington downgraded CBOE from Hold to Sell, lowering the price target from $203 to $174. The downgrade was based on valuation concerns, as the stock had already appreciated significantly over the past year. There were also concerns about potential headwinds in regulatory changes impacting trading revenue.
📉 Barclays Moves to Hold: On December 9, 2024, Barclays analyst Benjamin Budish downgraded CBOE from Buy to Hold, reducing the price target from $230 to $220. The reasoning behind the downgrade was a more cautious outlook on the near-term growth trajectory and concerns about sustainability of elevated trading volumes in certain derivative products.
Consensus Price Target
🔹 Current Analyst Consensus: The average price target for CBOE currently sits at $207, indicating a slight potential upside from the current trading levels. Analysts remain split on whether the company’s strong fundamentals justify its current valuation or if a pullback is likely before further gains.
The combination of upgrades and downgrades shows that while CBOE continues to perform well in its sector, investors should keep an eye on valuation levels and external risks that could impact the company’s future growth.
Earnings Report Summary
Cboe Global Markets recently shared its latest earnings report, and overall, the numbers tell a story of steady growth. The company pulled in $524.5 million in revenue for the fourth quarter, marking a 5% increase from the same time last year. For the full year, revenue came in at $2.1 billion, an 8% jump compared to the previous year.
Earnings per share (EPS) showed a mixed picture. The reported diluted EPS for the fourth quarter landed at $1.86, which was down 6% from last year. However, after adjustments, EPS was $2.10, reflecting a small 2% increase. Over the full year, the diluted EPS came in at $7.21, which was just 1% higher than the prior year, while the adjusted EPS set a new record at $8.61, showing a solid 10% growth.
A big driver behind Cboe’s success was its derivatives business, where revenue climbed 8% for the year. Investors flocked to options trading, pushing volumes higher, especially in S&P 500 index options, which saw a 7% increase, and VIX Volatility Index options, which surged 12%. This was fueled by market uncertainty, as traders sought ways to hedge against risk.
The company’s market data segment, which provides analytics and insights, also had a strong year, with revenue growing 7%. More firms are relying on advanced data to make trading decisions, which played right into Cboe’s strengths. The cash and spot markets business, which includes traditional stock trading, had a 10% revenue increase, showing that demand for Cboe’s equity trading services remains high.
Looking ahead, Cboe expects to see mid-single-digit revenue growth in 2025, with its data business aiming for mid-to-high single-digit growth. To keep everything running smoothly, the company projects its adjusted operating expenses to be somewhere between $837 million and $852 million for the year.
Overall, Cboe continues to show resilience, adapting to market trends while maintaining solid revenue growth. With traders actively using its platforms and demand rising for data-driven insights, the company seems well-positioned to keep its momentum going into the next year.
Financial Health and Stability
Beyond its dividend, CBOE’s financials look strong.
💵 Total Cash: $1.03 billion
💳 Total Debt: $1.6 billion
📉 Debt/Equity Ratio: 37.37%
📊 Operating Margin: 27.15%
🔹 Profit Margin: 18.68%
The company has a well-managed balance sheet with enough cash to handle debt obligations comfortably. Its current ratio of 1.78 suggests it has more than enough liquidity to cover short-term liabilities, which is a good sign for dividend investors who want stability.
One of the best things about CBOE is that it doesn’t rely too heavily on debt. Some financial firms carry excessive leverage, which can lead to riskier dividend payouts, but that’s not the case here. The company has taken a disciplined approach to financial management, ensuring it can sustain dividend payments through different market conditions.
Valuation and Stock Performance
At $213 per share, CBOE has been performing well, sitting close to its 52-week high of $221.66. Over the past year, the stock has risen 14.09%, outpacing the S&P 500’s 12% gain.
📉 Trailing P/E: 29.54 | Forward P/E: 23.75
📊 Price/Sales: 5.49
📈 Price/Book: 5.21
While CBOE isn’t the cheapest stock in the market, it trades at a reasonable valuation given its stability and earnings potential. The forward P/E of 23.75 suggests some room for multiple expansion, but investors are clearly willing to pay a premium for its market leadership and consistent growth.
From a technical standpoint, the stock remains in an uptrend, trading above its 50-day ($202.54) and 200-day ($197.87) moving averages, which points to solid momentum.
Risks and Considerations
No stock is without risks, and CBOE has a few that investors should keep in mind.
🔺 Market Volatility: While CBOE benefits from volatile markets, prolonged periods of low volatility could impact trading volumes and revenue.
🔺 Regulation: As a financial exchange operator, CBOE is subject to government regulations that could affect its business model.
🔺 Competition: Other exchanges, like CME Group and Nasdaq, offer similar products, making competition an ongoing factor.
🔺 Interest Rates: While CBOE isn’t a bank, changes in interest rates and economic conditions can influence investor sentiment and valuations.
Despite these risks, the company’s strong balance sheet and leadership position help mitigate potential downsides.
Final Thoughts
For dividend investors looking for a stable, growing income stream, CBOE is worth considering. While the yield isn’t high, its strong cash flow, disciplined payout strategy, and long history of dividend growth make it a reliable choice.
With 13 consecutive years of dividend increases and a business that thrives on market volatility, CBOE offers a unique combination of income stability and growth potential. It’s not the kind of stock you buy for massive immediate returns, but for those who want a financial stock that performs well in both bull and bear markets, it’s a compelling option.
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