You've Got Yield!

For those who bought in when America Online and media entertainment giant Time Warner (NYSE: TWX  ) combined to wed new media with the old economy, owning shares has been mostly a painful experience. But at least waiting things out will now pay off. Come September, the company expects to distribute the first of its quarterly dividends.

At just a nickel a share, the payout doesn't sound like much. The 1.1% yield isn't going to suddenly win over conservative investors looking for steady, fixed income securities. Then again, the new distributions will be better than what most of its peers are offering. Viacom (NYSE: VIA  ) and Disney (NYSE: DIS  ) yield a mere 0.8%, while News Corp. (NYSE: NWS  ) pays out even less than that.

Yet this move wasn't about pocket change -- it was making a statement. Even with its share price stuck in the teens, the company has been able to produce steady results. At America Online, where subscriber defections continue, the company was able to show a welcome spike in online ad revenues.

Despite the cash the company will shell out when it closes its joint deal with Comcast (Nasdaq: CMCSA  ) to acquire the assets of Adelphia Communications (OTC BB: ADELQ), it is still able to pay down its debt. And that's another welcome sign that the new dividend policy is likely to emphasize.

So although the move doesn't necessarily make it a screaming buy for our Income Investor newsletter service, it should provide some degree of comfort to patient shareholders. Using its free cash flow toward paying down its debt even more aggressively may seem like the more inspiring move, but Time Warner is choosing to tell investors that its balance sheet is in decent shape and that it doesn't mind sharing some of the wealth.

It's a statement that Time Warner needs to make. It's pocket change well spent.

You've got related headlines:

Longtime Fool contributor Rick Munarriz has been an AOL subscriber since 1992, and he does own shares in Disney.The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 492284, ~/Articles/ArticleHandler.aspx, 7/25/2014 2:33:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 16,948.87 -134.93 -0.79%
S&P 500 1,978.05 -9.93 -0.50%
NASD 4,449.07 -23.04 -0.52%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

7/25/2014 2:18 PM
CMCSA $54.52 Down -0.62 -1.12%
Comcast Corp CAPS Rating: ***
DIS $86.23 Down -0.57 -0.66%
Walt Disney CAPS Rating: *****
FOX $32.64 Up +0.07 +0.21%
Twenty-First Centu… CAPS Rating: **
TWX $85.05 Up +1.04 +1.24%
Time Warner CAPS Rating: **
VIA $86.07 Up +0.11 +0.13%
Viacom, Inc. CAPS Rating: ****

Advertisement