Market Overview

Disney: The Dow's New Dividend Dynamo

Disney: The Dow's New Dividend Dynamo

Shares of Walt Disney (NYSE: DIS), the media and entertainment conglomerate, traded higher by nearly one percent in Wednesday's after-hours session. The company announced a 25 percent dividend increase. Disney's new annual dividend will be 75 cents per share up from 60 cents.

"The dividend is payable on December 28, 2012 to shareholders of record at the close of business on December 10, 2012. The December payment represents the 57th consecutive dividend payment to shareholders," California-based Disney said in a statement.

There are several noteworthy aspects to Disney's dividend increase. For starters, this is not a special dividend. At a time when scores of U.S. companies are announcing special dividends due to fiscal cliff fears, Disney's payout boost could be a sign that at least one major company is prepared to keep rewarding shareholders even if the dividend tax rate climbs.

Second, Disney is becoming a dividend growth stock. The 25 percent dividend increase announced today follows a 50 percent boost announced in the fourth quarter of 2011. Under CEO Bob Iger, Disney's dividend growth has been impressive. Iger succeeded Michael Eisner as Disney's chief executive officer in 2005. Since then, the payout has nearly tripled when factoring in the newly announced dividend.

Finally, Disney is climbing the ranks of dividend-payers in the Dow Jones Industrial Average. At 75 cents per share per year, Disney's dividend is better in dollar terms than the payouts currently offered by Dow components Alcoa (NYSE: AA), Bank of America (NYSE: BAC), Cisco Systems (NASDAQ: CSCO), General Electric (NYSE: GE) and Hewlett-Packard (NYSE: HPQ). Disney's annual dividend now trails that of American Express (NYSE: AXP) by just five cents a share.

Based on Wednesday's closing price of $49.20 and a dividend of 75 cents a share, Disney would yield 1.5 percent.

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