Walt Disney (DIS) gave investors something to cheer about Thursday after the media and entertainment giant announced a significant increase to its dividend.
The hike brings Disney's semi-annual payout to 50 cents per share, or $1 per share on an annual basis, representing a more than 33% increase over the 75 cents per share it paid to shareholders in fiscal 2024.
The dividend will be paid in two installments – the first payment of 50 cents per share will come on January 16, 2025, to shareholders on record as of December 16, 2024, and the second will come on July 23, 2025, to shareholders on record as of June 24, 2025.
"It's been a highly successful year for The Walt Disney Company, stemming from the extensive strategic work across the company to improve quality, innovation, efficiency, and value creation," said Disney CEO Bob Iger said in a statement. "With the company operating from a renewed position of strength, we are pleased to increase the dividend for shareholders while continuing to invest for the future and drive sustained growth through Disney’s world-class portfolio of assets."
After suspending its dividend in 2019 amid the COVID-19 pandemic, Disney reinstated it in late 2023 and began semi-annual payments in 2024.
Why Disney's dividend growth is important
Companies that consistently raise their dividends are notable for several reasons. For one, "companies that raise their payouts like clockwork decade after decade can produce superior total returns (price change plus dividends) over the long run, even if they sport apparently ho-hum yields to begin with," writes Dan Burrows, senior investing writer at Kiplinger, in his feature on the best dividend stocks for dependable dividend growth.
Indeed, DIS stock is up 26.8% on a price return basis for the year to date, but 28.2% higher when you add in the dividend.
Additionally, dividend growers offer some peace of mind to investors. "After all, any company that manages to raise its dividend year after year – through recession, war, market crashes and more – is demonstrating both its financial resilience and its commitment to returning cash to shareholders," Burrows adds.
Is DIS a buy, sell or hold?
Wall Street is mostly bullish on the Dow Jones stock. According to S&P Global Market Intelligence, the average analyst target price for DIS stock is $121.61, representing implied upside of more than 4% to current levels. Meanwhile, the consensus recommendation is Buy.
However, there are some on Wall Street that are still on the sidelines. Jefferies analyst James Heaney, for instance, recently initiated coverage on DIS with a Hold rating and a $120 price target.
While Heaney is upbeat about Disney's streaming business amid expectations for bundling, advertising, stronger content and cost cuts to improve direct-to-consumer operating margins, he's "more neutral on the Experiences business as the slowdown in Parks and Epic Games launch create risks to the 6% to 8% fiscal 2025 operating income growth" the company guided for.
His Hold rating is based on assumptions that Disney's recent multi-year guidance is already priced into the large-cap stock's share price.
