Intercontinental Exchange (NYSE:ICE) Has Announced That It Will Be Increasing Its Dividend To $0.48

Intercontinental Exchange, Inc. (NYSE:ICE) has announced that it will be increasing its periodic dividend on the 31st of March to $0.48, which will be 6.7% higher than last year's comparable payment amount of $0.45. Even though the dividend went up, the yield is still quite low at only 1.1%.

Check out our latest analysis for Intercontinental Exchange

Intercontinental Exchange's Payment Could Potentially Have Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Intercontinental Exchange's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 38.0% over the next year. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Intercontinental Exchange Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $0.52 total annually to $1.80. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See Intercontinental Exchange's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Intercontinental Exchange has seen EPS rising for the last five years, at 6.8% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Intercontinental Exchange Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Intercontinental Exchange that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.