What are we looking for?
Sustainable dividends from top companies satisfying demand for new entertainment/media content.
The screen
Tom Cruise’s blockbuster Top Gun: Maverick continues to soar, with global box office receipts in excess of US$550-million following its second weekend in theatres.
The strong showing for Paramount Pictures’ latest megahit bodes well for top content providers and their investors as they look to a post-COVID future.
While many of the most prominent providers, including Netflix Inc. and 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. 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’s 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 six stocks. Paramount Global (formerly ViacomCBS), based in New York, has a portfolio including Paramount+, CBS, Paramount Pictures, Nickelodeon, MTV and Comedy Central, among others. Toronto’s Corus Entertainment Inc.’s media operations include 33 specialty television networks such as HGTV and Food Network Canada. The company also generates lots of original content that it licenses to networks such as Discovery and Hulu. Fox Corp., headquartered in New York, owns Fox News, Fox Business, and the Fox network. Based in Philadelphia, telecom giant Comcast Corp. is also a big content generator through NBCUniversal’s networks and streaming brands (including NBC, Bravo, USA and Peacock) plus TV/film studios (Universal Pictures and DreamWorks). Another company based in New York, News Corp., owns The Wall Street Journal, Barron’s, The Australian, and more. And finally, World Wrestling Entertainment Inc., headquartered in Connecticut, gets most of its revenue from TV rights to its wrestling events, but is now starting to produce fictionalized TV shows. (Its meagre dividend yield is in part because of its recent double-digit share price gains.)
We advise investors to do additional research on any investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
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