The Disney Dividend Will Not Be Returning Soon
One of the biggest gripes that activist investor Nelson Peltz and the Trian Company have with the current state of the Walt Disney Company, is the lack of dividend payout.
While many companies who have suspended their dividends during the pandemic have since reinstated the payouts, Walt Disney has not.
Nelson Peltz is launching a campaign for a Disney board seat
After a string of high level purchases, including the divisive purchase of 20th Century Fox, the company has simply accumulated too much debt to restart dividend payouts.
Restore the Magic?
In an attempt to get a seat on the Disney board, Nelson Peltz and Trian have launched the “Restore The Magic” campaign. One of the tenets of the campaign has been that Disney needs to restore its dividend.
According to Trian, the aforementioned purchase of Fox, combined with Disney’s streaming spending, have been largely claimed for the lack of payouts.
Photo: RestoretheMagic.com
Disney on the other hand, argues that it is using available cash to strengthen its business. When asked about reinstating dividend payouts in 2021, former CEO Bob Chapek dismissed the idea.
“We’re not going to entertain doing that,” Chapek said, until the company’s credit rating and cash flows improve. “The clear priority is funding our new growth businesses that we’ve got.”
Photo: Chip Somodevilla/Getty Images
Too Much Debt
As of last October, Disney is saddled with over $45.3 billion dollars in debt. This is a significant increate from the $17.1 billion they owed prior to the company’ s purchase of Fox.
Disney’s purchase of Fox was seen as the natural continuation of CEO Bob Iger’s knack for acquiring intellectual properties. Under Iger, Disney managed to bring Pixar, Marvel, Lucasfilm, and most of Fox’s properties, under the Disney umbrella.
When Will Dividend Payments Return?
Disney has continued to be adamant that it is not time to reinstate dividend payments. Although Wall Street insiders say it is simply a matter of time.
Photo: Walt Disney Co, Bottom R)(Laurent Viteur/Getty Images, Randy Shropshire/Getty Images for Vox Media and Walt Disney Co
When asked about resuming payments last October, Disney CFO Christine McCarthey said that when the company is ready to give investors money back, dividend payments will be at the front of the line.
Disney will surly pay off its Fox debt over time, finally allowing dividend payments to return. When that is, only time will tell.
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