Lionsgate To Offer First Quarterly Dividend And Ups Share Repurchases

Management’s vote of confidence this morning follows a three month period when Lionsgate‘s shares have declined more than 20%. The company says that the board declared a quarterly dividend of five cents a share payable on February 7 to shareholders of record at the end of 2013. “Our outstanding film and TV performance continues to translate into strong financial results,” CEO Jon Feltheimer and Vice Chairman Michael Burns say in a statement. “We’re pleased that our financial strength and excellent visibility enable us to offer our first quarterly dividend, returning value to our shareholders as we continue to grow the Company.” The company adds in an SEC filing that on Tuesday the board raised its stock repurchase plan to $300M, including $65M that’s already been repurchased under the previous authorization. Although the dividend is relatively small, it should enable Lionsgate to “broaden out the investor base to include funds which require dividends,” Stifel analyst Benjamin Mogil says. He adds that it’s “extremely rare” for a movie producer to offer a dividend and “speaks to the remarkable trajectory this company has seen over the last few years.”

The recent dip in Lionsgate’s share price follows a year of torrid growth — it’s still up 79.3% in 2013 — helped by the success of the Hunger Games and Twilight franchises. Some investors became skittish, though, as box office sales for The Hunger Games: Catching Fire fell short of their extravagant expectations, and amid concerns that sales for the upcoming film Divergent may disappoint. Investors “have lost sight of the myriad of catalysts” for Lionsgate next year, B. Riley & Co analyst David Miller said this week in a report reiterating his “buy” recommendation. Although he lowered his global box office estimate for Catching Fire to $840M from $900M, he says that it will be “a wildly profitable piece of business.”