The Walt Disney Company currently does not pay a dividend to its shareholders. Disney stopped paying dividends in 2020 in an effort to conserve cash. Now that things are returning to normal, when will Disney bring their dividend back?
Disney CEO Bob Chapek has not released a timeline for dividends to return to shareholders. In late 2021, he said the dividend returning is “in the distant future.”
Below are Chapek’s comments on the dividend from the Goldman Sachs 30th Annual Communacopia Conference.
“I think what we’re going to do is, number one, our clear priority, and the Board agrees with management, that the clear priority is funding our new growth businesses that we’ve got. But once we get to a point where, again, our cash flow is funding that, handling some of the debt that we’ve got, then everyone agrees that it would be a great thing to reinstate that dividend and do share buybacks.”
“But that’s sort of in the distant future, and we’re not going to entertain doing that until we can reach that Single-A level, and we have clear sailing from here, and this pandemic is in the rearview mirror.”
Prior to 2020, Disney paid dividends semi-annually to its shareholders. Disney paid out $1.76 per share in dividends in 2019, which totaled around $2.9 billion. Even with things going back to normal, it’s clear Disney is hesitant to reinstate the dividend amidst the rising costs to operate its parks and to create new content for its streaming services. Disney appears to be positioning itself as a growth stock for the foreseeable future.
However, we don’t think Disney’s dividend is gone for good. Chapek, and the rest of Disney’s Board, appear interested in bringing back the dividend when it makes sense for their business objectives. There may not be a timeline, but they haven’t ruled it out entirely. That said, they also haven’t mentioned the dividend yet in 2022.
The dividend, and Disney’s stock as a whole, will be a fascinating story to follow in 2022 and beyond. The stock has been trading near its 52-week low and is well removed from its all-time high of $201 seen in March 2021. Meanwhile, turmoil has followed CEO Bob Chapek ever since he took over at Disney in early 2020.
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