Walt Disney's Dividend Is Back. Will DIS Stock Follow?

(Image credit: Getty Images)

published 1 December 2023

Walt Disney (DIS) reinstated its dividend after a three-year suspension, a move that's good news for income investors and could help bolster the media and entertainment giant's beleaguered share price.

Disney's board on Thursday declared a cash dividend of 30 cents per share, payable on January 10 to shareholders of record at the close of business on December 11, 2023.

"This has been a year of important progress for The Walt Disney Company, defined by a strategic restructuring and a renewed focus on long-term growth," said Disney Chairman Mark Parker in a news release. "As Disney moves forward with its key strategic objectives, we are pleased to declare a dividend for our shareholders while we continue to invest in the company's future and prioritize meaningful value creation."

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Disney suspended its dividend in the spring of 2020 in order to conserve cash amid the COVID-19 pandemic.

Also on Thursday, Disney said that Morgan Stanley (MS) CEO James Gorman and former Sky TV chief Jeremy Darroch will join its board early next year. The move comes as Disney faces a proxy fight with activist investor Nelson Peltz, who is reportedly seeking at least two board seats.

Better times ahead for DIS stock?

Disney shareholders can be forgiven if they wish the company were celebrating its 100th anniversary against a happier backdrop. Like the rest of the industry, Disney is grappling with slower advertising spending, the decline of linear TV and steep losses in its streaming business.

Shares in DIS now lag the broader market on an annualized total return basis over pretty much every standardized period you care to measure. That's a big come down for a name that was once one of the 30 best stocks of the past 30 years.

Indeed, if you'd put $1,000 into Disney stock 20 years ago, you would be very disappointed with the results today.

As painful a period as this has been for long-term DIS shareholders, Wall Street thinks better times are ahead. Disney is one of analysts' top Dow Jones stocks, for one thing. Of the 32 analysts issuing opinions on Disney stock surveyed by S&P Global Market Intelligence, 19 rate it at Strong Buy, five call it a Buy, six have it at Hold and two rate it at Strong Sell. That works out to a consensus recommendation of Buy, with high conviction.

Meanwhile, with an average target price of $103.71, the Street gives DIS stock implied price upside of about 13% over the next year or so.

"Disney remains Netflix's (NFLX) one true competitor in long-form video streaming, and is taking giant steps toward profitability in its direct-to-consumer businesses," says Argus Research analyst Joseph Bonner, who rates DIS at Buy. "With the return of Bob Iger as CEO, Disney is working to lower investment in its direct-to-consumer business and to focus on the most profitable content."

The market's so-called smart money increasingly likes Disney stock too. Although it may have fallen off the list of hedge funds' favorite blue chip stocks in the third quarter, hedge funds still increased their net ownership of Disney stock by more than 12%, or 23 million shares, during the period.

Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.