Recent Buy – DIS

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Summary

  • I initiated a position in DIS pre-earnings, securing an initial yield on cost of 1.48%. That’s a low yield, but dividend growth potential more than compensates, in my view.
  • With a payout ratio below 28.9%, DIS has ample room for continued and rapid dividend growth.

Feb 2, 2016: Bought 10 shares of DIS at $93.xx per share.

The Walt Disney Company (NYSE:DIS), more commonly known as Disney, is a diversified international family entertainment company based in Burbank, California. Founded on October 16, 1923, by Walt Disney and Roy O. Disney.

Overview

Walt Disney Co., together with its subsidiaries, is a diversified global media conglomerate.

They operate through five segments:

  1. Media Networks (43% of fiscal year 2014 revenue);
  2. Parks and Resorts (31%);
  3. Studio Entertainment (15%);
  4. Consumer Products (8%);
  5. Interactive (3%).

Disney owns a number of different, but complementary, businesses in media and entertainment. Perhaps most well known, they own and operate the Walt Disney World Resort in Florida and the Disneyland Resort in California. They also wholly own, have ownership interests, and/or collect royalties from a number of related parks, cruise lines, and resorts across the world. Have you heard of Disney Paris? Or the up and coming Disney Shanghai?

Assets in media broadcasting:

  • ABC broadcast network and eight television stations
  • Cable assets in ABC Family,
  • Disney Channels
  • 50% stake in A&E Television Networks
  • 80% stake in ESPN

Studio entertainment includes live-action and animated motion pictures, direct-to-video content, musical recordings, and live stage plays. Distribution of this content is primarily through the Walt Disney Pictures, Pixar, Marvel, Touchstone, and LucasFilm brands.

Of course, they also work with publishers, licensees, and retailers throughout the world to manufacture, market, and license consumer goods based on their intellectual properties. Does it sounds familiar with our FIRE theme? Disney actually have a side income from royalties pipelines and I’d like to get a tiny portion of that. 

Disney pays dividends annually in the month of January and has a streak of 5 years of dividend increases. My initial yield on cost (YoC) is 1.48%

<a href=”http://www.gurufocus.com/dividend/DIS”><img src=”http://chart.gurufocus.com/1454446448141.png” /></a>

Yield on Cost

 

Growth Rate (1-year) Yield on Cost (1-year) Growth Rate (3-year) Yield on Cost (3-year) Growth Rate (5-year) Yield on Cost (5-year) Growth Rate (10-year) Yield on Cost (10-year)
110.50% 3.03% 44.50% 4.34% 35.90% 6.68% 18.40% 7.8%

Conclusion:

  • Diversify income streams
  • Impressive dividend growth
  • Ability to sustain during the recession
  • New theme park in the line up in China
  • New Movies in the line up

DIS is a buy in my book.

Full disclosure: I’m long DIS.

GA

5 Comments

  1. Hey Vivianne,

    Nice pick. DIS is a hell of a quality stock. Personally, I’m not a fan of the low yield, but as you said the growth prospects are worth it. Definitely curious to see what they report for earnings, as I’m certain everyone else is. Keep at it!

    DB

    • DB,

      Thanks so much! Always appreciate the support and enthusiasm.

      I’m also curious about their earning. Aapl and Disney seems to give very low guidance, so that they can always beat. However, with the strengthening of the dollars, it would definitely hit the profit. Not to mention investors would sell at any sight of a deep sell off. However, I’d just take this opportunity to buy.

      Thanks again for visiting and commenting.

  2. Ciao Vivienne,
    I own a “little” bit of Disney, mostly for growth potential and diversification purposes, I missed my chance to increase the position at the beginning of January., but let’s say that I had other more interesting stocks to buy then… Still a good company and I also hope to see that dividend rise quickly in the coming years…. 🙂

  3. Great buy! DIS is a diversified entertainment giant. I think purchasing Star Wars alone was a huge boost to the future cash flows of the company. The one interesting thing is what’s going on with ESPN. I love sports, so I always get a kick when I read about some of the struggles that are happening at the network. DIS is the kind of company that will find new ways to generate new streams of cash flow for investors. A great low yield, high growth rate stock. Great buy and addition to your portfolio!

    Bert

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