Walt Disney Co. (NYSE:DIS) Should Start Paying Dividends on Quarterly Basis


Last five years have resulted in an increase in Walt Disney Co.’s (NYSE:DIS) stock of over 233%, which definitely implies a praise for its Chief Executive Officer, Bob Iger. However, things haven’t always been this great for Walt Disney Co.’s (NYSE:DIS) shareholders. There was a huge controversy between Walt Disney’s Nephew, Roy Disney and the Chief Executive Officer of that time, Michael Eisner. This conflict was heavily publicized and as a consequence Eisner had to leave his chairmanship in 2004.  After a year, Eisner bid farewell to the company.

Roy advised the company to consider breaking up Disney theme parks and stores etc.; in order to increase the sales performance. However, shareholders were in luck, since Iger didn’t pay heed to Roy’s advice.Walt Disney Co. (NYSE:DIS) conglomerate structure is what holds it together and has been a consistent source of strength for the company.

Furthermore, getting rid of ESPN would have stripped Walt Disney Co.(NYSE:DIS) off its commodification value, especially if ESPN’s astounding network consideration in taken into perspective. Although Iger has done a lot for the growth of Walt Disney Co. (NYSE:DIS), however there is one small thing which can be done further; and which would ultimately result into broadening of the company’s investor base. That tiny thing which can change a lot and bring more profits to the shareholders is to pay the dividends on a quarterly basis instead of an annual one.

If Walt Disney Co.’s (NYSE:DIS) previous performances were taken into account then perhaps its paying of dividends on annual basis does make sense. Every company has a distinct payout strategy; but that strategy ought to be in line with the interests of both its shareholders and stakeholders.

A vital question in this regard is that whether or not Walt Disney Co. (NYSE:DIS) has enough money to pay the dividend on a quarterly basis. Being a conglomerate, it no longer has to rely upon its theme park and movie studio which run on either a seasonal or a cyclical basis. This fact is reiterated from the financial report of last year, which delineates that Walt Disney Co. (NYSE:DIS) earned approximately 56% of its income from ESPN and ABC. Interestingly, these media networks happen to be the very businesses which Roy Disney wanted to give up. Until 1962, the company has indeed been paying dividends on a quarterly basis, however this policy was changed to an annual one, by the year 1999.

The major reason in play behind Walt Disney Co.’s (NYSE:DIS) strategy of paying dividends on an annual basis is the costs. When the company changed its policy from quarterly to annual in 1999, the cost of mailing checks was held responsible for this change. Yet, since Walt Disney Co. (NYSE:DIS) has deployed an electronic methodology to issue its shares now; therefore it ought to switch back to dividend pay outs on a quarterly basis. This strategy would make Walt Disney Co. (NYSE:DIS)  attractive and popular among those investors who prefer having their money on quarterly basis, instead of getting it altogether once every year. This option seems to be even more preferable, since now the dividend payout per share has increased from $0.47 to $1.15.

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