March 22, 2021

Walt Disney Co: Will Disney Stock Bring Back Its Dividend?

 

Don’t Ignore DIS Stock

 


 

Some income investors may have dropped Walt Disney Co (NYSE:DIS) from their radar. The reason seemed obvious: in May 2020, the company announced that it would not be paying the semiannual cash dividend for the first half of 2020. And in November, management decided not to pay a dividend for the second half of the year, either.

 

In other words, by itself, Disney no longer produces income for investors. But I believe the company still deserves attention. In fact, Disney stock remains one of the holdings in the model portfolio in my paid advisory Income for Life. I featured DIS stock in the newsletter back in 2015, and the model portfolio has not trimmed a single share.

 

There are several reasons why I’ve kept Disney stock in the model portfolio and don’t plan to change that anytime soon.

 

First, selling blue-chip stocks in a panic is usually not a good idea. Walt Disney Co’s dividend suspension was announced last May, when the market was yet to make a full recovery and DIS stock was trading well below its pre-COVID-19 levels. As it turned out, not panicking during a market panic pays off. Disney stock not only bounced back, but actually went on to soar to new heights.

 

 

Second—and long-term readers would know this—DIS stock wasn’t exactly a high-dividend stock to begin with. The company was paying semiannual dividends when every other stock in the Income for Life model portfolio was paying quarterly or monthly dividends. Its last semiannual payout of $0.88 per share did not translate to a high yield even when its stock price was lower—and it certainly wouldn’t be a high-yield stock at today’s prices. The model portfolio was well diversified, with plenty of higher-yielding companies with more frequent payouts, so we didn’t need to worry about Disney stock’s two missed payments a year.

 

Continue reading …

 

No comments:

Post a Comment