Chuck, I can respect your appreciation for New York Times' (NYSE:NYT) dividends. But what once looked like a supremely secure payout seems increasingly less stable these days. Witness the recent trends:
|
Metrics (in millions) |
FY 2003 |
FY 2004 |
FY 2005 |
TTM |
|---|---|---|---|---|
|
Operational Cash Flow |
$466 |
$444 |
$294 |
$276 |
|
Capital Expenditures |
$173 |
$189 |
$221 |
$286 |
|
Free Cash Flow |
$293 |
$255 |
$73 |
($10) |
|
Dividends Paid |
$85.5 |
$90.1 |
$94.5 |
$98.8 |
The payout ratio has gone from 18% of operating cash flow in 2003 to a staggering 35% today, with no sign of the trend reversing. New York Times used to be awash in free cash flow, but that's a red line today.
The company, along with Gannett (NYSE:GCI), Dow Jones (NYSE:DJ), and the rest, is trying hard to stay relevant. Times recently released a piece of software to let users more easily access the paper's online materials on the go, for example -- but it seems nobody noticed. The new information portals are companies like Yahoo! (NASDAQ:YHOO) and Google (NASDAQ:GOOG), not dead-tree dinosaurs like New York Times or Tribune (NYSE:TRB), tacking on a few Internet bells and whistles to keep pace. No wonder the old-school media giants are selling off their non-core assets -- they pretty much have to if they want to keep the dividends flowing. Thanks, but I'll pass.
Further Foolishness:
- When Dividends Are Dicey
- Dividends: High Yield or Smoke?
- The Dividend Dilemma
- Foolish Fundamentals: Payout Ratios
The Duel's not done yet! Go back and read the other arguments, make your own case in Motley Fool CAPS, then vote for the winner.
The New York Times is a Motley Fool Income Investor recommendation, and Yahoo! is a Stock Advisor pick. Find out more with a couple of free 30-day trials to our premium newsletters -- no strings attached.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is always worth fighting for.
