Walt Disney is not a “hand-to-mouth business,” says Motley Fool, and as a full-blown conglomerate, it is no longer a seasonal business. It therefore should bring its dividend policy in line with other similar companies.
MF was referring specifically to how dividends are paid.
Since 1999, the company has been paying out one annual dividend.
Motley Fool’s Jamal Carnette says it’s time to make four quarterly payments instead.
He noted that paying it all at once may have made sense back when the company relied on theme park attendance for much of its income, along with movie income which follows its own yearly cycles.
These days, the company banks relatively steady income from ABC and even steadier income from ESPN.
Carnette says there is another reason that the company abandoned quarterly dividends back when – to save on mailing costs. He says they are largely a thing of the past in this electronic world and being forced to spend money on stamps is no longer an excuse.
On the plus side, he noted that shareholders certainly have nothing to complain about as far as performance goes – the stock has risen 233% over five years, generated about $6.5B in free cash flow in 2014 and paid about $1.5B of that out as dividends.
According to Carnette, the company can be seen as an income generator for certain investors, and noted that a quarterly payment would be especially attractive to retired investors seeking income throughout the year.
Carnette concluded, “It has been a great decade for Disney investors with Iger at the helm, but I couldn’t think of a more shareholder-friendly way to thank investors for his 10th anniversary. Disney should rethink its dividend payout policy; the benefits to many shareholders are worth more than the incremental costs.”
