Time Warner Cable Inc (TWC), Google Inc (GOOG), Comcast Corporation (CMCSA) – Investing in Content Delivery: Part Two

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Comcast Corporation (NASDAQ:CMCSA) currently pays out 30% of its earnings to support a dividend of 1.7%. This company saw revenue increase 7% year-over-year and earnings grow by 30% in the most recent quarter. Part of this growth is due to the NBC Universal acquisition that it completed this past year. Comcast saw growth across the board with net customer additions and revenue per customer growing by increasing the services provided.

Comcast’s Cable Network division accounts for 40% of revenue and 72% of Comcast’s operating profits. With the soaring amount of revenue coming in from advertisers this year, Comcast Corporation (NASDAQ:CMCSA)’s original content can charge more for each advertisement slot. The other great strength Comcast has is that its cable network competitors have to pay Comcast to carry NBC’s content, which is a great position to be in.

Looking forward, Comcast Corporation (NASDAQ:CMCSA) will continue to derive a higher percentage of its profits from NBC Universal as the cable and Internet network divisions see competition heat up from other providers and telecom companies. However, Comcast has hedged its bets by purchasing a property that produces content. This will pay off in spades for Comcast shareholders.

Foolish bottom line

Cable companies are competing to provide a good that is becoming commoditized and will continue to see shrinking margins. However, companies like Time Warner Cable Inc (NYSE:TWC) and Google are using ISP networks to add value for their customers. Google is using its Fiber network to drive more Internet traffic and, ultimately, searches. Time Warner Cable is using it’s new Wi-Fi networks to keep customers locked in and drive revenue growth by being differentiated.

Comcast Corporation (NASDAQ:CMCSA) is able to provide content to its end users while also competing in the cable and Internet provider space. It pays a modest dividend and has built a wide moat around itself while diversifying its revenue streams. Comcast receives two thumbs up if you are an investor looking to become a shareholder in a cable and Internet service provider.

The article Investing in Content Delivery: Part 2 originally appeared on Fool.com and is written by Wes Patoka.

Wes Patoka owns shares of Google. Wes is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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