Giant Mouse-Ears, Big Dividend
At the End of November 2011 the Walt Disney Company increased its dividend from $.40 to $.60, a 50% boost bringing its yield close to 1.7%. This fact coupled with the company’s stock buyback plan of 400 million shares,[i] indicates that a “great big, beautiful tomorrow”[ii] exists for this company.
Typically, a dividend increase is a signal of confidence for the business and its long-term prospects since a dividend after-all is a commitment to put money in investors’ pockets and should not soon be cut. In the case of the company that Mickey built, this increase represents a three-fold hike over historic bumps: in the last eight years, the Disney dividend has been raised six times [iii] and never by more than 15%. This current dividend liftoff is bigger than Spaceship Earth.
A Fabulous Log Flume of a Company
The Walt Disney Company is a not-so small world of cable properties, theme parks, hotels, cruise ships, movies and merchandise. The cable properties, the hugest portion of this animal safari, represent 67% of operating income and include the ABC, ESPN, and Disney Channel networks. Highlighting its importance even further are the huge transmission fees that the cable segment generates from cable and satellite providers for ABC. Disney is not so much a theme park and animated feature company nowadays as it is a cable network which recently secured a contract with the NFL to broadcast its games through 2021. Can I get a“Yo-Ho” anyone?
Building a Small Business That Warren Buffett Would Love, available at Amazon.com orBarnesandNoble.com.
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