The Walt Disney Co (DIS) Dividend Stock Analysis

In the past decade, the dividend payout ratio increased slightly from 13.80% in 2007 to 23.90% in 2016. The company has a perennially low dividend payout ratio, as the rest of money is allocated to expand the media empire, and provide more dividends in the future. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.

The return on equity increased from 14.90% in 2007 to 20.30% in 2016. I generally like seeing a high return on equity, which is also relatively stable over time.

Currently, Walt Disney Co (NYSE:DIS) is attractively valued at 17 times earnings. The company will probably turn off many investors because it has a low yield of 1.50% and pays dividends twice an year. However, I really like the company, and I believe it has a wide moat. I had hesitated initiating a position in the company in the past, because of irrelevant factors such as low yield, while ignoring the company’s strong competitive position. I felt more comfortable initiating a position in the company at lower prices. I believe that this is an amazing business, that is available at an attractive price. It would be even more interesting if it were available at 15 – 16 times earnings.

If you have had the fortitude to purchase Disney, I believe this is the type of company to hold for decades, while quietly compounding your wealth and dividend income.

Disney’s integrated business of theme parks, movies, & consumer products result in a wide moat with a royalty on youth. Disney’s Media Networks also has a wide moat with ESPN. I believe this is the type of company to hold for decades, while quietly compounding your wealth and dividend income.

Full Disclosure: Long DIS

Additional Links:

(1) http://www.dividendgrowthinvestor.com/2011/10/seven-wide-moat-dividends-stocks-to.html