Tuesday, May 5, 2020

Walt Disney Companies (DIS) Suspends Dividends

I just learned that Disney (DIS) is suspending dividends for the first half of 2020. (Source: CNBC) The quarterly earnings release didn't look good, which is perhaps why the dividend was suspended - the company cannot afford it in the current environment. As a result, Disney is going to lose its status of a dividend achiever. It had raised dividends for 10 years in a row.

Walt Disney Companies would not be eligible for inclusion in the dividend achievers list until some time in 2030.

This was a surprise for me. The company had kept dividends unchanged in December, which was a surprising move. The other surprising move was when Iger decided to step down all of a sudden. After the company stopped raising dividends, I stopped adding to the stock per my risk management guidelines.

I will stick to my plan, and sell the stock tomorrow, after the market opens.  This is per my risk management rules. I am going to think about what to do with the cash from the sale. Apparently the moat was not wide enough to get Disney through a global pandemic.

Check my analysis of Walt Disney Companies (DIS) for more information about the company. I last analyzed this former dividend achiever in 2018.

This was my second dividend suspension this year, after TJX Companies (TJX) suspended dividends. I also had a dividend cut this week, when Royal Dutch Shell (RDS.B) decided to cut dividends. All other oil majors are keeping theirs unchanged ( so far).

So far, the number of dividend increases surpasses the number of dividend cuts and suspensions by a large factor. However, the companies cutting or suspending dividends are no longer just those that are cyclical, and usually cut in a recession.

I will consider Disney again, at the right valuation, once it re-establishes dividends and starts growing them.

Relevant Articles:

Disney (DIS) Dividend Stock Analysis
Risk Management
Disney: A Wide-Moat Stock To Hold Forever
Warren Buffett’s Eight Billion Dollar Mistake

Popular Posts