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The Walt Disney Company (DIS): A Few Reasons Why This Stock Might Get Better

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The Walt Disney Company (NYSE:DIS)Over the years, there have been a few notable giants in the areas of media and entertainment. The competition is cut-throat in this arena, especially given the numerous different outlets that are available for obtaining media today. Gone are the days of only getting news from the living room television, and likewise, seeing movies only in the theater on Saturday nights. Today, media giants are pursuing viewers from a variety of angles — and when successful, investors are being rewarded as well.

The magic of Disney

The Walt Disney Company (NYSE:DIS), known for its entertainment venues worldwide, operates a variety of different media outlets that include a broadcast television network, as well as numerous television and radio stations, and even digital and publishing operations. In addition, the company produces, licenses, and distributes animated and live-action television and movie programming.

Started in 1923, The Walt Disney Company (NYSE:DIS) has grown exponentially since its humble beginnings. In addition to earnings from Disney’s myriad of entertainment venues, the company also operates related theme park and other travel options, including Disneyland, Disney World, Disney Cruise Lines, and a number of resorts located throughout the world.

Recently, The Walt Disney Company (NYSE:DIS) entered into a multi-year agreement with Electronic Arts Inc. (NASDAQ:EA) for the purpose of developing and publishing new “Star Wars” related video games. The company has also been breaking earnings records with mega-hit blockbuster movies of late, including the new Iron Man 3, which opened in early May with a $175 million weekend in the U.S. and Canada. This sum exceeds the amount that the previous two Iron Man titles combined generated throughout their opening weekend. This is just one of the clear indicators that the $4 billion purchase of Marvel Comics by Disney in 2009 has been a profitable endeavor.

This also continues to show just how powerful the media and entertainment division of The Walt Disney Company (NYSE:DIS) really is. In staying in line with its strategy to maximize the value of its content, the company has recently started to distribute its content in new ways, such as iPod formatted video and online video-on-demand.

While The Walt Disney Company (NYSE:DIS)’s current dividend is standing at $0.75 per share — equating to a 1.20% annual dividend yield to investors — its share price is hovering near the high point of its 52-week range. Looking forward, analysts are mixed, however, the majority cite that this stock still holds growth opportunity for investors in both the short and the long run. With projected cash flow this year of more than $8 billion, it’s my view that Disney is a stock worth buying.

Other entertainment venues in the chase

One of the other media industry giants and a close competitor of Disney is Time Warner Inc (NYSE:TWX). This company has been following quite closely behind in at least some of The Walt Disney Company (NYSE:DIS)‘s footsteps. Headquartered in New York, this media and entertainment monster operates in three primary segments — television & film, networks, and publishing. The company has also begun the operation of digital media properties, primarily consisting of brand-aligned websites.

Revenue comes from a variety of other sources, too, including the sale of DVD and Blu-ray Discs, premium pay cable channels such as Cinemax and HBO, and the licensing of original programming to cable system operators.

The success of all of these areas combined has led the shares of Time Warner 66% higher over the past 12 months — including a rise of more than 26% year-to-date for 2013, and a market capitalization of more than $56.6 billion.

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