Fewer Than 30 Companies in the S&P 500 Have Raised Their Dividend for 50 Straight Years. This Financial Stock Is One of Them.

Dividend stocks are an excellent source of passive income and offer additional benefits. According to a study by Hartford Funds, companies that raise their annual dividend payouts outperform those that don't, with less volatility. The reason is simple: Companies with long track records of dividend increases boast steady businesses, strong capital management, and a commitment to rewarding shareholders.

Fewer than 30 companies in the S&P 500 have raised their dividends for 50 straight years, and S&P Global (NYSE: SPGI) is one financial stock in this illustrious group. For 54 consecutive years, S&P Global has grown its annual dividend and has delivered for its investors.

S&P Global has produced impressive returns for shareholders

S&P Global has a stellar track record and has been an excellent compounder for long-term investors. Over the past three decades, the company has delivered annualized returns (including reinvested dividends) north of 15%, outperforming the broader S&P 500 index's 10.4% annualized return over that same period.

Earlier this year, S&P Global stock plunged. In February, it announced disappointing fourth-quarter results. On top of that, fears that artificial intelligence (AI) would disrupt software stocks weighed on data vendors and software providers, and S&P Global was lumped in with this group. That said, S&P Global has a strong market position and proprietary data that could be harder for AI to disrupt.

What makes S&P Global a standout performer is its importance to financial markets. It operates one of the largest credit ratings businesses in the United States, boasting a 50% market share. Moody's, the second-largest credit ratings agency, has a 31% market share.

You can think of S&P Global as a toll collector, capturing recurring fees as global debt markets expand, without taking on any credit or market risk itself. Its benchmarks and index products also benefit from the growth of financial markets.

Should you buy the dip in S&P Global?

With its asset-light business model, S&P Global boasts stellar operating margins. In the second quarter, its operating margin was 54%, including 68% in its ratings business and 71% in indexes. Additionally, debt issuance picked up in the second quarter, with billed issuance up 25% year over year. The company also raised its full-year earnings-per-share guidance, alleviating some concerns from earlier in the year.

The stock has recovered some of its decline, but still trades at 26.4 times earnings, below its recent peak of 56 times earnings and below its 10-year average P/E ratio of 31.8. For investors seeking a quality financial stock with a steadily growing dividend, S&P Global is a stock to buy on the dip right now.

Courtney Carlsen has positions in S&P Global. The Motley Fool has positions in and recommends Moody's and S&P Global. The Motley Fool has a disclosure policy.