Disney Stock: A Growth and Income Story

disney-stockSome investors like growth stocks. These are companies that are typically earlier on in their development, and are enjoying rapid growth of revenue and earnings per share. Growth stocks tend to reward shareholders with strong stock price appreciation.
On the other hand, some investors prefer income stocks. These are often more mature companies that generate reliable cash flow, and return a portion of their profits to shareholders in the form of dividend payments.
But there are plenty of companies that offer their investors a mix of both growth and income. The Walt Disney Co. (NYSE: DIS) is a prime example of a company that rewards its shareholders with a rising stock price and dividend income as well.
Disney is a massive entertainment conglomerate, with a range of businesses that are all thriving. Disney’s strong media assets include ABC and ESPN. It also operates its namesake theme parks and resorts, has a movie studio and sells branded merchandise.
Disney grew earnings per share by 26% last year, as all five of Disney’s core businesses – media networks, parks and resorts, studio entertainment, consumer products and interactive – grew revenue and operating profit.

Impressive First Half

So far in its current fiscal year, Disney is off to an equally impressive start. Over the first two quarters of the fiscal year, it grew EPS by 18% year-over-year and saw strong results across its various operating segments.
Disney generated 12% revenue growth in its media networks division over the first half. And Disney’s movie studios should have a very successful current quarter in store, thanks to blockbusters such as “Inside Out.”
Meanwhile, parks and resort revenue rose 7% over the first two quarters year-over-year, thanks to price increases for both the theme parks and cruise line. Finally, consumer products revenue jumped 17% in the first two quarters, thanks to strong merchandise sales of “Frozen”-related products.
Such strong growth has resulted in significant stock price gains. Shares of Disney are up 239% in the past five years. The stock has handily outperformed the broader market in that time. The S&P 500 index is up 92% in the same period.

Disney Dividends

In addition to its growth, Disney stock has rewarded shareholders with rapidly rising dividend payments over the past several years. The company recently increased its dividend by 15%, a continuation of a long-running trend.
Over the past five years, Disney has raised its dividend by 27% each year on average. Moreover, it also announced recently that it will move to semi-annual dividend payments. Until now, it had paid its dividend once per year.
By increasing the amount of dividend payments each year, Disney will allow its investors to compound their dividends twice as often as before. This will enhance shareholders’ ability to enjoy the wealth-creating magic of compounding dividends.
This is the time of year that Disney dominates. As the summer gets into full swing, consumers are going on vacation and watching the big summer movies. All of this activity directly benefits Disney.
Disney is off to a fantastic start to the fiscal year, and 2015 is likely going to be another great year for the company. For investors looking for a nice mix of growth and income, consider Disney stock.

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