Why Walt Disney’s Dividend Yield Curve Is Sloping Upwards
Revenue and EPS of Walt Disney
Walt Disney (DIS) posted 6% revenue growth in 2016 compared to almost 8% growth in 2015. This is due to a slowdown in growth from media networks, parks and resorts, and consumer products and interactive media offset by impressive growth in studio entertainment. The flat revenue growth posted in the first nine months of 2017 has been driven by studio entertainment and consumer products and interactive media offset by the company’s other segments.
The company noted 17% EPS growth in 2016 compared to 15% in 2015. The company managed growth despite higher operating costs, restructuring and impairment charges, and interest costs. All of these costs were offset by share buybacks. The -2% growth in EPS for the first nine months of 2017 is due to the higher interest costs and other expenses offset by share buybacks. The company has maintained a good annual free cash flow balance.
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Dividend trajectory of Walt Disney
Walt Disney’s upward sloping dividend yield curve is due to both the increase in dividend per share and falling prices. Walt Disney has a dividend yield of 1.6% and YTD price loss of 3.6%. This compares to a dividend yield of 2.3% and YTD price gains of 14.7% from the Dow Jones Industrial Average (DJIA-INDEX) (DIA). The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.4% and YTD price gains of 13.3%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has YTD price gains of 21.4%.
The Guggenheim Dow Jones Industrial Average Dividend ETF (DJD) is a dividend ETF with exposure to Walt Disney. It offers a dividend yield of 2.7% and a PE of 20.9x. The WisdomTree U.S. Dividend Growth Fund (DGRW) is a dividend ETF with exposure to Walt Disney. It offers a 2.7% dividend yield and a PE of 20.3x.