What are we looking for?
Sustainable dividends from top providers of entertainment and media content.
The screen
Netflix recently shipped its last DVD, 25 years after delivering its first in 1998. Originally a rental-by-mail service, the company is now the world’s largest streaming platform.
It and most of today’s growing number of streaming services continue to grapple with the impact of striking actors, even after reaching a deal with striking writers. Still, we see strong growth ahead for top providers of entertainment and media regardless of when a new contract is ratified.
While many of the most prominent providers, including Netflix Inc. and the Walt Disney Co., don’t currently pay dividends, there are others offering sustainable payouts to match their bright prospects.
Our search started with a list of Canadian and U.S. media firms with strong content generation – both entertainment and news. We then applied our TSI Dividend Sustainability Rating System to a short list of income payers. It awards points to a stock based on key factors:
- one point for five years of continuous dividend payments – two points for more than five;
- two points if it has raised the payment in the past five years;
- one point for management’s commitment to dividends;
- one point for operating in non-cyclical industries;
- one point for limited exposure to foreign currency rates and freedom from political interference;
- two points for a strong balance sheet, including manageable debt and adequate cash;
- two points for a long-term record of positive earnings and cash flow to cover dividends;
- one point if the company is an industry leader.
Companies with 10 to 12 points have the most secure dividends or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.
More about TSI Network
TSI Network is the online home of The Successful Investor Inc., the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated seven stocks. Paramount Global PARA-Q (formerly ViacomCBS), based in New York City, has a portfolio that includes Paramount+, CBS, Paramount Pictures, Nickelodeon, MTV and Comedy Central, among others. Fox Corp. FOX-Q, also headquartered in New York City, owns Fox News, Fox Sports and the Fox Network. Another New York City-based firm, TKO Group Holdings Inc. TKO-N, was formed recently through the merger of World Wrestling Entertainment (WWE) and the Ultimate Fighting Championship (UFC) and gets a lot of its revenue from broadcast rights to its live events (although it does have a meagre dividend yield). Based in Philadelphia, telecom giant Comcast Corp. CCZ-N is also a big content generator through NBCUniversal’s networks (NBC, Bravo, USA Network and Peacock) plus TV/film studios (Universal Pictures and DreamWorks). Another company based in New York City, News Corp. NWS-Q, owns The Wall Street Journal, Barron’s, The Australian and more. New York City-based Sirius XM Holdings Inc. SIRI-Q broadcasts a wide variety of programming (music, sports, talk, news, comedy and so on) through SiriusXM and Pandora. Toronto’s Corus Entertainment Inc.’s CJR-B-T media operations include 33 specialty television networks such as HGTV Canada and Food Network Canada. The company also generates lots of original content that it licenses to networks such as Discovery and Hulu.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
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