Disney Continues to Boost Shareholders’ Wealth



Methods to enhance shareholders’ wealth

Media conglomerate The Walt Disney Company (DIS) looks attractive to investors, mainly due to its regular dividend payments and healthy share buyback goals. It continues to enhance shareholders’ wealth through such objectives.

In fiscal 2017, the company returned ~$11.8 billion to its shareholders through buybacks and dividend payments, compared with $9.8 billion last year. As shown in the graph above, the company has returned ~$40 billion to shareholders in the last four years through dividend payments and share repurchases.

In 2015, Disney started paying dividends annually rather than half-yearly. In 2017, its dividend was $1.56, whereas Comcast (CMCSA), News (NWSA), and Viacom (VIAB) paid dividends of $0.63, $0.20, and $0.80, respectively. At present, the company’s dividend yield is 1.5%. In fiscal 2017, the company paid dividends totaling ~$2.4 billion and bought shares worth $9.4 billion, compared with $2.3 billion and $7.5 billion, respectively, in fiscal 2016.

Factors boosting shareholders’ wealth

Despite having high capital expenditures, Disney has maintained a healthy free cash flow. It had free cash flow of $8.7 billion in fiscal 2017. In the last four years, the company has maintained average free cash flow of nearly $7.6 billion. Moreover, the company’s current debt-to-equity ratio is 0.55x, which indicates that it has lower leverage. This healthy free cash flow and lower leverage may allow the company to maintain regular dividend payments and increase share buybacks.

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