Viacom Enhances Shareholder Value - Analyst Blog

The board of directors of media and film producing company, Viacom Inc. VIAB raised the quarterly cash dividend to 33 cents from 30 cents per class A and class B common share. The increased dividend will be payable on Jul 1, 2014 to shareholders of record at the close of market on Jun 13, 2014.

We believe the dividend hike is backed by robust earnings in the past few quarters. At the end of the second quarter of fiscal 2014, Viacom had $2,580 million in cash & cash equivalent compared to $2,403 million at the end of fiscal 2013.

Moreover, the company surpassed the Zacks Consensus Estimate in three of the last four quarters with an average earnings surprise of 3.6%. Viacom benefits from a well-balanced asset mix with entertainment content at its core. The company enhanced its brands worldwide through the creation and acquisition of hit programming, new channels, successful motion pictures, and other forms of entertainment, including video game offerings.

Continuous improvements in viewership ratings and renewal of the multi-platform deal with Time Warner Cable are expected to drive both advertisement and affiliate revenues. Moreover, increased investment in network and content expansion along with its recent decision to buy Channel 5 media company should bolster Viacom's top line, going forward.

The company has hiked its dividend thrice in the last four years besides paying dividend consistently since Jun 2010. The current dividend yield is 1.6%. Recently, Viacom's competitors Lions Gate Entertainment Corp. LGF, CBS Corp. CBS and Twenty-First Century Fox, Inc. (FOX) paid dividends of 5 cents, 12 cents and 12.5 cents respectively, with dividend yields of 0.8% each.

Viacom currently has a Zacks Rank #3 (Hold).