S&P Global has built a business model that depends on Wall Street’s constant need for timely market information. According to the report, the company makes much of its money from services that investors and financial institutions pay for repeatedly, rather than from one-time sales.
Its largest business is Market Intelligence, which covers stock and equity research, while its second-largest segment is bond ratings. The company also licenses the S&P 500 and other indexes, but that is not its main source of revenue. The report notes that many brokerage customers and fixed-income investors already rely on S&P Global’s research and ratings, often without always realizing it.
A recurring business model
About half of S&P Global’s business is subscription-based, and the report says that demand for its information is unlikely to fade. Because investors and institutions need this data for their own use or for clients, the company benefits from a relatively dependable flow of revenue.
That stability has also supported shareholder returns. According to the report, S&P Global has paid dividends for decades and has increased its per-share dividend every year for more than 50 years. The article presents that consistency as a key feature of the company’s appeal to investors.
Source: nasdaq.com
