Comcast (CMCSA) hikes dividend by 15%, but offers a low yield.

Comcast’s (NYSE:CMCSA) dividend was increased by a solid 15%. Its overall yield is 0.84% based upon the increase. The firm started paying a dividend in 1993.

Comcast is the largest cable company in the U.S. It operates several entities, such as cable, broadcast, theme parks, and films. It owns key brands like NBC Universal, CNBC, USA, Telemundo, and the E! network.  The media giant produces films through its Universal Pictures and Illumination brand names. It also owns the Universal theme parks in Florida, Orlando, and Japan. Comcast also is the owner of the Philadelphia Flyers hockey franchise. The firm was originally founded in Philadelphia, Pennsylvania in 1963.

Comcast has maintained a solid three-year growth rate of dividends of 11 percent. Comcast currently ranks 4th in yield within the large cap services, CATV category. The quarterly dividend for the April payment will be $0.1575 versus the prior year rate of $0.1375 per share. Comcast Corp. is a member of our Top 100 Dividend Stock List (see below).

top-100

The dividend will be paid at the new higher rate on April 28, 2017, to shareholders of record at close of business on April 5, 2017. Comcast is currently priced at $75.42. Listed in the table below are the quarterly dividend payments since 2010.

Date Quarterly Dividend
4/3/2017 0.1575
*stock split
12/30/2016 0.275
10/3/2016 0.275
7/1/2016 0.275
4/4/2016 0.275
1/4/2016 0.25
10/5/2015 0.25
6/29/2015 0.25
3/30/2015 0.25
1/5/2015 0.225
9/29/2014 0.225
6/30/2014 0.225
3/31/2014 0.225
12/30/2013 0.195
9/30/2013 0.195
7/1/2013 0.195
4/1/2013 0.195
12/28/2012 0.163
10/1/2012 0.163
6/29/2012 0.163
4/2/2012 0.163
12/30/2011 0.113
10/3/2011 0.113
7/1/2011 0.113
4/4/2011 0.113
1/3/2011 0.095
10/4/2010 0.095
7/2/2010 0.095
4/5/2010 0.095
1/4/2010 0.095

Quantitative Analysis:

We examine Comcast upon our five key criteria, which include; 

Category Value Score
Dividend Yield 0.84% 394
Dividend Growth (3 to 7 year avg) 15.2% 123
Forward P/E 17.38 148
S&P Financial Rating A- 120
Beta  0.95 125
Total Score   910

Additional quantitative information on P/S ratio and historical yield;

% Yield 3 Year Div. Growth Rate 7 Year Div. Growth Rate SPS 2017 P/S Ratio 10 yr P/S Low 10 yr P/S High 5 yr lowest Yield % 5 yr max Yield %
0.84% 11% 18.9% 36.5 2.08 1.30 2.40 0.84% 1.84%

Positives;

  • Comcast maintains an investment grade credit rating.
  • Comcast has maintained an impressive three-year growth rate of dividends of 11 percent.
  • Comcast maintains a beta of 0.95, lower than the average company.

Negative;

  • Comcast’s dividend yield is well below that of the S&P 500 Index.
  • Comcast’s current dividend yield (0.84%) is at the bottom of its ten-year average.
  • Comcast is trading above its ten-year average price/sales (P/S) ratio.

Latest Earnings & Overall Analysis:

Comcast issued its earnings data on January 26th. The company reported Q4 of $0.89 earnings per share, topping the consensus estimate of $0.87 by $0.02.  NBC Universal led the company with strong growth.   The earnings results were a near 10% gain from last year’s results. Revenue came in just above $21 billion for the quarter. NBC Universal maintained revenue of $8.5 billion.  80,000 new video subscribers came on board during the quarter while high-speed data continued its growth pace, with 385,000 additions. Content licensing rose by nearly 15% in the past three months while cable network revenue growth came in at modest 4%.

In film, DreamWorks Animation’s revenue came into the fold. Overall movies did well with revenue growing by double digits to nearly $2 billion.  The new opening of the Wizarding World of Harry Potter at the Universal Studios Hollywood location also helped propel revenue.  Sales in this division grew by over 13%.

 

One item of note for any Comcast investor is AT&T’s potential acquisition of Time Warner. If the deal goes through, there would be added competition from a much larger, diverse player in the media business.  AT&T has already indicated its expects approval by the end of 2017.  The cable business is the key asset for Comcast and provides the majority of revenue for the firm. Despite its hefty size, Comcast continues to grow its subscriber base.  Much like Disney, the firm maintains standout properties and top brands.

The great consistency of the firm is noteworthy. However, the firm has been stingy with sharing cash with shareholders. Although the dividend raise was well above the average firm and the company committed to buying back $5 billion in stock, its paltry yield places Comcast below other U.S. companies in our rankings. Its stock rise has resulted in the company’s overall yield to fall from 1.8% in early 2016 to under 1% today.

Although the firm maintains consistent high earnings, an investment grade rating,  and a low beta, Comcast does not qualify as a member of our  Top 100 Dividend Stocks list for 2017.

 

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Comcast Corp. Dividend Yield Chart (Click to enlarge)

cmcsa3

Chart Explanation:  Dividend growth stocks may be viewed favorably when the current yield is above historical readings for the past 5 years.

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