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Beat The Market While Collecting Huge Dividends...
That's The Chicago Way!
It’s rare to find a high-yield dividend stock that also beats the market.
Yet, that’s exactly what CME Group Inc. ($CME) does. Formerly known as Chicago Mercantile Exchange Holdings Inc., this company operates the world’s largest commodities exchange.
This is the platform that profits every time someone trades oil contracts or soybean futures. CME Group is essentially a play on the very activity of trading itself.
Owning this stock gives you exposure to FOREX trades, crypto derivatives, commodity futures, and other high-risk trades. However, you’re owning a piece of the exchange. And the exchange always wins.
Over the past decade, CME Group has delivered an average annual total return of 15.87%.
This is over 1% more than the S&P’s average annual total return of 14.85%.
Additionally, CME Group is a secret high-yielder thanks to its annual special dividend payments. The firm pays an established quarterly dividend of $1.25/share. But, CME also issues a special distribution at the end of every year.
Last December, for example, CME paid a $5.80/share special dividend.
This distribution gave investors a total payout of $10.40/share in 2024.
An investor who bought CME Group in January, 2024 would have paid roughly $200 per share. Then, they would have collected $10.40/share in total dividends, giving them a 5.2% yield on cost.
Also, by December 31st, 2024, CME Group was trading for over $232 per share.
So, an investor would have pocketed $10.40/share in dividend income while also seeing their holdings appreciate by 16%.
CME Group is never a cheap stock. The firm is currently trading at a price to earnings ratio of 25.10. But, this is a wide moat business that also pays a high starting yield. And, CME Group is a long-term market-beater.
Sadly, I don’t have a crystal ball and cannot forecast what the special dividend payment will be this year. However, CME tends to increase these distributions. Likewise, the firm has a 5-year compound annual dividend growth rate of 8.23% — and that only accounts for the company’s predetermined quarterly distributions.
At today’s share price of $279.58, this stock offers a 1.78% yield based solely on its regular dividend.
If CME repeats last year’s $5.80 special dividend, the total starting yield jumps to 3.86%.
Assuming a modest ~5% increase to the special payment, CME would distribute $6.09/share in special payments. Something that’s more than possible thanks to the firm’s low payout ratio of 44.71%.
Additionally, the firm typically raises its regular dividend in February.
Let’s be conservative and say CME Group hikes this dividend by 7% next February. That brings the total quarterly payouts to $5.35/share for 2026. Combined with this year’s upcoming special distribution, this would give CME a forward yield of approximately 4.1%. And that doesn’t even consider what CME Group might pay for its special distribution in 2026.
CME is a rare wide-moat business that combines market-beating performance with a high starting yield. If you’re looking for income and growth, consider this company.
Here’s an un-boring way to invest that billionaires have quietly leveraged for decades
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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.
