Disney stockholders now have something to look forward to — CEO Michael Eisner says he will push for an increase in the company’s annual dividend.
Commenting on his confidence in the Mouse’s balance sheet at the Allen & Co. media confab in Sun Valley, Idaho on Friday, Eisner said that management would likely recommend to the board an increase in the company’s dividend, which currently stands at $0.21 per share annually.
Disney shares gained 25¢ to close at $24.60 on Friday.
Media congloms, whose shares have laid fallow over the past five years, are under pressure to return some of their accumulated cash back to shareholders, either in the form of dividends or stock buybacks. In the last month, both Viacom and Comcast have discussed plans for sizable buybacks that they hope will increase share value.
While many analysts were hoping Disney might entertain a buyback, the company has insisted that it wants to up its credit rating from BBB+ to A-, which makes a dividend more practical. Research by Prudential Securities last month suggested that Disney could afford to buy back nearly $5 billion of its stock with current cash flow and debt capacity if it were willing to simply maintain its current debt rating.
Eisner’s dividend proposal will nevertheless come as good news to shareholders looking for signs of growth and stability at the company. Although Disney stock has staged a comeback in the last year, whilemany of its peers have traded flat, it is still way off its $38 a share high water mark set back in spring 1998.
Mouse board will likely vote on a dividend hike after company discloses full fiscal year earnings after the end of its Sept. 30 fourth quarter.