Disney just offered an early holiday gift to its shareholders, at a time when some are wondering whether it’s time to sell the stock which is hovering around its all-time high: The board announced a 34% increase in the annual cash dividend, raising it by 29 cents a share to $1.15 — likely a $2 billion outlay. That may surprise some investors following Disney’s 14.7% dividend increase last year. Today’s hike gives the company a dividend yield of 1.2% which Wells Fargo Securities’ Marci Ryvicker says “is relatively in line with the diversified peer group average of 1.3%.”
The entertainment giant “delivered the highest results in its history in Fiscal 2014, reflecting the extraordinary quality of our creative content and the unparalleled strength of our brands,” CEO Bob Iger says. “We achieved record revenue, net income and earnings per share for the fourth year in a row, and we are delighted to be able to increase our shareholder dividend…while continuing to invest for future growth.” The cash will be paid on January 8 to shareholders of record on December 15.
The company’s bullishness comes as some investors say the stock may already be fully valued. This morning Guggenheim Partners’ Michael Morris reiterated his “neutral” rating on Disney — even as he raised his target price 8.5% to $102 a share. (It closed today at $93.11.) While he likes the company, he says that the “risk to pay-TV subscriber and travel trends” are “under-appreciated.” He also noted that the stock price reflects a rosy consensus view that “all future Disney films are hits.”
In addition to the dividend announcement, Disney says today that it will hold its shareholder meeting on March 12 in San Francisco.