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Globe and Mail
23-06-2025
- Business
- Globe and Mail
This Incredible Dividend Growth Stock's Hidden AI Story Could Deliver 20% Annual Returns
The market is completely missing what's happening at S&P Global (NYSE: SPGI). While investors obsess over the latest artificial intelligence (AI) start-up or trendy tech stock, this 165-year-old financial data powerhouse is quietly orchestrating one of the most compelling margin expansion stories in the market. The combination of an upcoming business spinoff, aggressive AI integration, and a management team that's already proved it can achieve 50.9% GAAP operating margins creates a setup that could deliver double-digit annual returns for the next 10 years. The company nobody's talking about S&P Global might not grab headlines like the AI darlings, but this $160 billion company touches nearly every corner of the global financial system. The company operates through four main divisions: Ratings, providing credit ratings on $17 trillion in debt; Market Intelligence, which deals with financial data and analytics; Indices, including the S&P 500; and Platts, which involves commodity pricing. A fifth division, Mobility, is set to be spun off in 2026. Here's what matters: In 2021, before acquiring IHS Markit, S&P Global achieved GAAP a operating margin of 50.9%. Yes, you read that correctly. This financial services company was generating profit margins that would make most software companies jealous. Today, those GAAP operating margins are projected to be around 43% in 2025 as the company continues to digest the massive acquisition. But management has a clear path back to those historic highs. The AI revolution Wall Street isn't watching While everyone focuses on chatbots and image generators, S&P Global is using AI to transform the economics of financial data. The company's Kensho division, acquired for $550 million in 2018, has become the cornerstone of an AI strategy that management says is driving significant productivity gains and workflow efficiencies across operations. S&P Global has developed AI benchmarking tools through Kensho that evaluate large language models for business and finance use cases. These "S&P AI Benchmarks by Kensho" are gaining traction as standardized metrics to compare AI systems, with major companies such as Accenture partnering to use them. As more companies adopt these benchmarks, S&P Global could benefit from network effects that strengthen its competitive position. The company has also deployed internal AI tools such as Spark Assist and client-facing assistants such as ChatIQ, which management describes as accelerating workflows and helping employees work more efficiently. Although specific cost savings haven't been disclosed, these initiatives are part of S&P Global's broader push to use AI to enhance margins and improve customer experiences. The catalyst everyone's ignoring The planned spinoff of S&P Global's Mobility division in 2026 represents more than just corporate restructuring. This business, which includes the valuable Carfax brand, generates about 11% of company revenue, accounting for $1.6 billion in 2024. Its removal will allow S&P Global to focus entirely on its highest-margin financial data and analytics businesses while unlocking an estimated $5 billion to $8 billion in value for shareholders. Post-spinoff, S&P Global will be a cleaner, higher-margin business focused entirely on financial data and analytics. The simplified structure should help the market better appreciate the company's true earnings power. Conglomerates typically trade at discounts to focused pure plays, and removing the Mobility business eliminates that complexity discount. Numbers that demand attention Wall Street sees adjusted operating margins reaching 52% by 2029, exceeding even the company's 2021 peak. The company's 2025 outlook already shows progress, with guidance calling for revenue growth of 4% to 6%, GAAP earnings per share of $14.60 to $15.10, and adjusted earnings per share of $16.75 to $17.25. That gap between GAAP and adjusted earnings reflects the ongoing impact of acquisition-related amortization. Here's the power of combining margin expansion with steady revenue growth: If S&P Global maintains 6% annual revenue growth, the high end of its 2025 guidance range, sales would reach $27 billion by 2035. Now add margin expansion: If GAAP margins return to their proven 50.9% peak from today's 43%, the earnings impact is dramatic. Consider the math: $27 billion in revenue at a 50.9% GAAP operating margin generates $13.7 billion in operating income. After accounting for interest, taxes, and the narrowing gap between GAAP and adjusted earnings as acquisition costs fade, earnings per share could realistically reach $40 to $45, more than double today's levels. Even applying a conservative valuation multiple of 30 times earnings, which is below today's multiple, that translates to a stock price of $1,200 to $1,350. Meanwhile, investors collect a growing dividend backed by 52 consecutive years of increases. The current yield of 0.76% might seem modest, but here's where dividend growth becomes powerful: If S&P Global continues raising its dividend at a conservative 10% annually, below its historical average, that $3.84 annual dividend could grow to roughly $10 per share by 2035. For investors who buy today, that means collecting $10 annually on shares purchased for $504, a 2% yield on their original investment. This " yield on cost" concept rewards patient investors, as each dividend increase means more income on the same initial investment, regardless of where the stock price trades. Why this incredible opportunity exists S&P Global offers something increasingly rare in today's market: a proven business model with clear catalysts for margin expansion and a management team that's already demonstrated what's possible. While growth investors chase the next shiny object and value investors wait for deeper discounts, S&P Global sits in the sweet spot -- a quality compounder available at a reasonable price with multiple ways to win. The upcoming spinoff provides the catalyst. The AI transformation provides the margin expansion. And five decades of dividend growth provides income while you wait. For investors seeking both growth and income, S&P Global's combination of margin expansion potential and reliable dividend growth makes it a compelling opportunity at current prices. Should you invest $1,000 in S&P Global right now? Before you buy stock in S&P Global, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P Global wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!* Now, it's worth noting Stock Advisor 's total average return is994% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Yahoo
23-06-2025
- Business
- Yahoo
This Incredible Dividend Growth Stock's Hidden AI Story Could Deliver 20% Annual Returns
A major spinoff and aggressive AI deployment are setting up a powerful margin expansion story. Management has already proved it can achieve tech-like profitability levels. Five decades of consecutive dividend increases provide a growing income stream while you wait. 10 stocks we like better than S&P Global › The market is completely missing what's happening at S&P Global (NYSE: SPGI). While investors obsess over the latest artificial intelligence (AI) start-up or trendy tech stock, this 165-year-old financial data powerhouse is quietly orchestrating one of the most compelling margin expansion stories in the market. The combination of an upcoming business spinoff, aggressive AI integration, and a management team that's already proved it can achieve 50.9% GAAP operating margins creates a setup that could deliver double-digit annual returns for the next 10 years. S&P Global might not grab headlines like the AI darlings, but this $160 billion company touches nearly every corner of the global financial system. The company operates through four main divisions: Ratings, providing credit ratings on $17 trillion in debt; Market Intelligence, which deals with financial data and analytics; Indices, including the S&P 500; and Platts, which involves commodity pricing. A fifth division, Mobility, is set to be spun off in 2026. Here's what matters: In 2021, before acquiring IHS Markit, S&P Global achieved GAAP a operating margin of 50.9%. Yes, you read that correctly. This financial services company was generating profit margins that would make most software companies jealous. Today, those GAAP operating margins are projected to be around 43% in 2025 as the company continues to digest the massive acquisition. But management has a clear path back to those historic highs. While everyone focuses on chatbots and image generators, S&P Global is using AI to transform the economics of financial data. The company's Kensho division, acquired for $550 million in 2018, has become the cornerstone of an AI strategy that management says is driving significant productivity gains and workflow efficiencies across operations. S&P Global has developed AI benchmarking tools through Kensho that evaluate large language models for business and finance use cases. These "S&P AI Benchmarks by Kensho" are gaining traction as standardized metrics to compare AI systems, with major companies such as Accenture partnering to use them. As more companies adopt these benchmarks, S&P Global could benefit from network effects that strengthen its competitive position. The company has also deployed internal AI tools such as Spark Assist and client-facing assistants such as ChatIQ, which management describes as accelerating workflows and helping employees work more efficiently. Although specific cost savings haven't been disclosed, these initiatives are part of S&P Global's broader push to use AI to enhance margins and improve customer experiences. The planned spinoff of S&P Global's Mobility division in 2026 represents more than just corporate restructuring. This business, which includes the valuable Carfax brand, generates about 11% of company revenue, accounting for $1.6 billion in 2024. Its removal will allow S&P Global to focus entirely on its highest-margin financial data and analytics businesses while unlocking an estimated $5 billion to $8 billion in value for shareholders. Post-spinoff, S&P Global will be a cleaner, higher-margin business focused entirely on financial data and analytics. The simplified structure should help the market better appreciate the company's true earnings power. Conglomerates typically trade at discounts to focused pure plays, and removing the Mobility business eliminates that complexity discount. Wall Street sees adjusted operating margins reaching 52% by 2029, exceeding even the company's 2021 peak. The company's 2025 outlook already shows progress, with guidance calling for revenue growth of 4% to 6%, GAAP earnings per share of $14.60 to $15.10, and adjusted earnings per share of $16.75 to $17.25. That gap between GAAP and adjusted earnings reflects the ongoing impact of acquisition-related amortization. Here's the power of combining margin expansion with steady revenue growth: If S&P Global maintains 6% annual revenue growth, the high end of its 2025 guidance range, sales would reach $27 billion by 2035. Now add margin expansion: If GAAP margins return to their proven 50.9% peak from today's 43%, the earnings impact is dramatic. Consider the math: $27 billion in revenue at a 50.9% GAAP operating margin generates $13.7 billion in operating income. After accounting for interest, taxes, and the narrowing gap between GAAP and adjusted earnings as acquisition costs fade, earnings per share could realistically reach $40 to $45, more than double today's levels. Even applying a conservative valuation multiple of 30 times earnings, which is below today's multiple, that translates to a stock price of $1,200 to $1,350. Meanwhile, investors collect a growing dividend backed by 52 consecutive years of increases. The current yield of 0.76% might seem modest, but here's where dividend growth becomes powerful: If S&P Global continues raising its dividend at a conservative 10% annually, below its historical average, that $3.84 annual dividend could grow to roughly $10 per share by 2035. For investors who buy today, that means collecting $10 annually on shares purchased for $504, a 2% yield on their original investment. This "yield on cost" concept rewards patient investors, as each dividend increase means more income on the same initial investment, regardless of where the stock price trades. S&P Global offers something increasingly rare in today's market: a proven business model with clear catalysts for margin expansion and a management team that's already demonstrated what's possible. While growth investors chase the next shiny object and value investors wait for deeper discounts, S&P Global sits in the sweet spot -- a quality compounder available at a reasonable price with multiple ways to win. The upcoming spinoff provides the catalyst. The AI transformation provides the margin expansion. And five decades of dividend growth provides income while you wait. For investors seeking both growth and income, S&P Global's combination of margin expansion potential and reliable dividend growth makes it a compelling opportunity at current prices. Before you buy stock in S&P Global, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P Global wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 George Budwell has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc and S&P Global. The Motley Fool has a disclosure policy. This Incredible Dividend Growth Stock's Hidden AI Story Could Deliver 20% Annual Returns was originally published by The Motley Fool Sign in to access your portfolio
Business Wire
22-05-2025
- Business
- Business Wire
Ed Chidsey Appointed President of Inovalon's Insights Business Unit
BOWIE, Md.--(BUSINESS WIRE)-- Inovalon, a leading provider of cloud-based software solutions empowering data-driven healthcare, today announced the appointment of Ed Chidsey as the President of Inovalon's Insights Business Unit. Chidsey has over 30 years of experience with the majority spent leading global technology and information businesses at S&P Global and IHS Markit. In his new role as leader of Inovalon's Insights Business Unit, Chidsey is responsible for the Company's real-world data and evidence offerings informed by Inovalon's MORE 2 Registry®, the healthcare industry's largest primary source dataset. 'Ed Chidsey is a highly accomplished executive with deep commercial expertise and a proven track record leading and scaling complex data and analytics businesses,' said Adam Kansler, CEO of Inovalon. 'As a collaborative leader known for driving growth and delivering top-tier performance, Ed's wealth of leadership experience will further strengthen Inovalon's ability to make a meaningful impact on our customers and the patients they serve.' Prior to joining Inovalon, Chidsey was Senior Vice President and Global Head of the Data, Valuations, and Analytics business for S&P Global's Market Intelligence division, where he oversaw a $1 billion business with over 2,000 global employees. He was previously responsible for IHS Markit's Information Services business when it was acquired by S&P Global, and spent more than a decade with JP Morgan Chase in various roles across the markets, asset management, and private banking divisions. 'I'm thrilled to join Inovalon at such a pivotal time when unlocking the full potential of data has never been more important,' said Chidsey. 'Data holds the power to improve and transform healthcare in a multitude of ways. Inovalon's unparalleled data assets and deep analytic capabilities uniquely position our solutions to empower customers with the intelligence they need to drive smarter decisions and ultimately improve patient and financial outcomes.' For more information on Inovalon's approach to enabling the power of data to improve healthcare outcomes and economics, visit About Inovalon Inovalon is a leading provider of cloud-based SaaS solutions empowering data-driven healthcare. The Inovalon ONE® Platform brings together national-scale connectivity, real-time primary source data access, and advanced analytics into a sophisticated cloud-based platform empowering improved outcomes and economics across the healthcare ecosystem. The company's analytics and capabilities are used by over 50,000 active, licensed customers, and are informed by the primary source data of more than 90 billion medical events across 1.1 million physicians, 696,000 clinical settings, and 409 million unique lives. For more information, visit
Bloomberg
06-05-2025
- Business
- Bloomberg
One Ship, $417 Million in New Tariffs: The Cost of Trump's Trade War
On April 24, against the backdrop of towering cranes, dockworkers at the Port of Long Beach began unloading the OOCL Violet, a hulking shipping vessel carrying thousands of containers full of goods bound for the US. The Violet is one of the first ships confronting a harsh, new reality: a steep 145% tariff rate on nearly half of its Chinese cargo, brought on by President Donald Trump's ongoing trade war with China. The ship had already begun loading goods bound for the US prior to Trump's April 2 tariff announcement. When the ship reached California, it carried cargo with a total estimated value of at least $564 million, according to detailed bills of lading data from IHS Markit. About 40% of the goods were likely subject to the new 145% rate, according to Bloomberg News estimates. The data suggests importing companies face at least $417 million in new tariffs for all goods on the ship. That's on top of preexisting import fees. 'It's definitely affecting business,' said Tino Muratore, general manager of Worldlawn Power Equipment in Beatrice, Neb., which had lawnmowers and parts on the ship. 'We don't know if this is permanent [or] temporary… so we're all in kind of a fog, if you will, and exploring other options.' The cargo on board the Violet represents a microcosm of consumer goods and industrial supplies: fish, sneakers, forklifts, latex medical gloves, car windshields, pasta, wheelchairs and bras. Calculating tariffs involves a complex set of factors including the type of product being imported, where it originated, and — for goods shipped in the week after Trump's announcement — when the ship left each port prior to arriving in America. The Violet first began loading cargo in Dalian, China, a major seaport located north of the Yellow Sea. At that time, most Chinese goods faced an additional 20% US tariff rate, originally stemming from Trump's concerns about China's role in the fentanyl crisis. Mere days later, as the ship left Ningbo, China, the top new rate had already risen to 45% for cars and some aluminum and steel products. In the biggest blow to the Violet's customers, a final tariff hike took effect just hours before the ship left Shanghai, pushing new duties on Chinese goods to a staggering 145%. This last-minute increase alone likely added $220 million to the import costs of US companies with cargo aboard the ship. Tariff Rates Changed During the OOCL Violet's Voyage Estimated highest new tariff paid on goods loaded at each port Many companies with cargo on the Violet — including Worldlawn Power Equipment — had limited time to react to the sudden tariff increases. 'We had some things on the water that were already in motion,' Muratore said. 'So yeah, we're just trying to figure out how to navigate this just like everybody else.' Bloomberg News estimated the cost of new White House tariffs for cargo on the Violet by consulting experts in international logistics, along with recent executive orders and US Customs and Border Protection guidance. The exact duties paid may differ from these estimates depending on the details importers provided to customs officials. Importers storing goods at the Port of Long Beach might face a different tariff amount if rates change before the cargo's release. A closer look at the Chinese cargo aboard the Violet highlights the wide-ranging impact of Trump's trade war with the world's second-largest economy: Chinese Goods Alone Totaled At Least $409M in New Tariffs In the short term, the new tariffs should generate billions of dollars in immediate revenue for the US Treasury — a cost that falls on American importers, who can choose to pass that onto consumers. The windfall, however, could be temporary. The number of cargo ships headed from China to the US has plummeted in recent weeks. A White House spokesperson said Trump administration policies are 'laying the groundwork for a long-term restoration,' citing rising gross domestic investment and March data that showed cooling inflation. The spokesperson did not address Bloomberg's findings about costs to importers and the impact of new tariffs, including the 145% on Chinese goods, which went into effect on April 10. Underscoring this trend, the Port of Long Beach projects a roughly 40% reduction in both vessel calls and import volumes between mid-April and mid-May, according to forecasts published by the port. This reflects the typical delay before supply-chain shifts impact the global economy. China will release April trade data on Friday, which will give the first comprehensive look at how exports from China have changed and how importers in the US have reacted to the jump in tariffs. For businesses such as Arctic Fisheries, dealing with the new tariffs is the latest challenge after years of turmoil. The company's president said he expects he'll need to borrow money — incurring interest charges — to pay the tariff bill for his fish shipment on the Violet, although he hasn't yet received the invoice. This comes after constant disruptions since 2018, including tariffs imposed by the first Trump administration, pandemic-related supply chain chaos, and sourcing issues due to the Russia-Ukraine war. While Kotok said he intends to pass the tariff costs onto his customers, existing fixed-price contracts limit his ability to do so. 'In the administration's attempt to put the screws to other nations, they put the vise on American businesses,' Kotok said, 'many of whom will not survive.' Methodology Tariff amounts were calculated based on the estimated value for approximately 6,000 bills-of-lading entries for goods that the OOCL Violet offloaded in Long Beach last month, according to data from IHS Markit. This story focuses on tariffs tied to the following White House executive orders: fentanyl-related China tariffs; Section 232 tariffs on aluminum, steel, cars and car parts (not yet in effect at the time that the Violet arrived in Long Beach); the baseline 10% global retaliatory tariff that went into effect on April 5; and the China-specific retaliatory tariff that went into effect on April 10. Available documentation, including technical annexes and US Customs and Border Protection guidance, were used to create lists of relevant HS commodity codes, according to the Harmonized Commodity Description and Coding System, as well as those excluded from any of the above tariffs. The specific rate for each shipment was determined based on the listed country of origin, the date and time the ship left the port where it was loaded and the 6-digit commodity code provided by IHS Markit (in 6% of cases only a 4-digit or 2-digit code is available). Where a given commodity code encompasses goods facing different tariff rates, the lower possible rate was applied except where the overwhelming majority of the goods would be eligible for the higher rate, based on an analysis of historical Census import data. Actual tariffs paid will depend on detailed information provided to US Customs and Border Protection, including the actual customs value, the specific time of departure, whether a product's inputs are tariffed at lower rates, as well as any amendments to the customs paperwork. Changes to tariff rates may also be made retroactive, in which case importers can request a refund. The estimated tariffs assume duties are paid right away. Some importers will put their goods into bonded warehouses where they can sit for weeks or months and during this period tarriff rates may change, altering the actual duties paid. All data and tariff rules are as of May 2.
