This post is a bit of a catch-up discussion on what I’ve been buying the past few months. In March I purchased $1000 more of BNS, and $1000 worth of INFY. In April I allocated $2000 towards Disney (DIS) stock. In this post I will be focusing on Disney. I’ve already explained my rationale for purchasing BNS, and INFY is a very small position. I’ll discuss Infosys (INFY) in a subsequent post. The Walt Disney Company is a massive $240 billion conglomerate. It operates networks ABC & ESPN, parks & resorts, a cruise line, and studio entertainment. The company also sells a variety of consumer products. Disney is behind franchises like the Marvel Cinematic Universe and Star Wars.
I have a complicated relationship with Disney. I visited the parks as a kid, watched their movies, and I have enjoyed some of their recent content. However, I disagree with the direction they took the Star Wars franchise. And from what I’ve heard from former employees, Disney engages in predatory labor practices. As a whole, I can’t deny it’s still a pretty solid business. Revenues and earnings have risen consistently over the past 20 years and the company caries little debt. Disney has current liabilities around $18 billion and a total debt-to-equity ratio of 0.36. In contrast, AT&Ts debt-to-equity is 0.84. This would suggest Disney is a much safer investment than AT&T.
This safety comes with a cost. The valuation is historically high, and the starting dividend yield is only 1.31%. This represents a 20% payout. However, there is considerable room for growth. Disney could theoretically double the dividend and not even blink an eye. The company also has some strong growth drivers. Disney recently announced Disney+, its new streaming service. Disney+ will consolidate Disney’s content and allow them to compete with Netflix, HBO, and Amazon. Furthermore, the company is about to open its latest theme park, Star Wars: Galaxy’s Edge. And of course, Disney will continue to generate millions from its studio entertainment franchises. Avengers Endgame has already made over $700 million. Toy Story 4 releases this summer and Star Wars Episode 9 releases in the fall.
As a “current income” play Disney ranks dead last. A 1.31% dividend paid biannually doesn’t necessarily pay the bills. What Disney does have going for it is a strong brand, incredible financial strength, numerous growth drivers, and a potential for substantial dividend growth. Disney is a well-diversified global company with a bright future and is a welcomed addition to my portfolio. In the coming weeks I’ll discuss my other stock purchases and some recent dividend increases. Like I said I’m playing catch up. I had some issues with the hosting company and was unable to post/edit for 3 weeks. Thankfully, everything was resolved, and I can continue with my regular postings.
DISCLAIMER: I am long on DIS & T and own both stocks. I am not a licensed investment adviser or tax professional. I am not liable for any losses incurred by any parties. This blog should be viewed for entertainment and/or educational purposes only. Any transactions published are not recommendations to buy or sell any securities. Please consult with an investment professional before making investment decisions.