Looking For Great Dividend Stocks? Give Comcast a Try

Against a backdrop of heightened economic uncertainty and an incredibly volatile stock market to start 2022, communications and media conglomerate Comcast (CMCSA -0.79%) reported first-quarter earnings. Investors were unimpressed, and shares tanked.

The stock price is now down about 19.2% for the year. For investors looking for a long-term winning dividend stock, Comcast is looking like a real steal of a deal. Here's why.

Image source: Getty Images.

Cable communications and "old-school TV" are still going strong

Comcast reported a 14% increase in revenue in the first quarter, driven by a big jump at NBCUniversal as Winter Olympics and Super Bowl revenue boosted the media segment. Movie studio ticket sales also helped, as did theme park attendance -- which made a big comeback compared to the mostly shuttered vacation destinations a year ago.  

However, as is typical with Comcast, the slow-and-steady cable communications segment was the real driver of revenue and profits. Thanks to net new 194,000 customer relationships, cable Comcast's various services (broadband internet, cable TV, and its wireless service, which piggybacks off of Verizon's (VZ -0.85%) network) notched solid increases in the quarter. 79% of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), Comcast's preferred metric for tracking profitability, came from the cable segment.

EBITDA = earnings before interest, tax, depreciation, and amortization. YOY = year over year. Data source: Comcast.  

Of particular note in the cable segment, total broadband internet subscribers increased to nearly 32.2 million in the first quarter, compared to just over 31 million a year prior. That allays some fears that were mounting that this primary growth driver for the business would lose steam as people begin to return to the office and leave home more often.  

TV has been one area of weakness as well. Comcast has been steadily losing subscribers to old cable TV packages for years, and that trend has continued. Net TV subscriber losses were 512,000, bringing Comcast's total down to 17.7 million (19.4 million last year).  

To fight cord-cutting hastened by streaming device platforms like Roku (ROKU -1.90%), Comcast announced a new joint venture with fellow cable operator Charter Communications (CHTR 0.26%) the day before earnings. As part of the deal, Comcast will license its Flex streaming devices and contribute its XClass smart TV software along with streaming service Xumo. Charter, for its part, will contribute $900 million, funded over several years.

Uncertain times, but steady profitable growth

Comcast's business is undergoing an assault on several fronts. The way consumers connect to the internet (mobile) and watch TV (internet streaming) is changing, and it's easy to fault this ginormous conglomerate for not moving faster to update its business model. With so many wheels to steer at the same time (cable is a sprawling behemoth all on its own, now throw in media companies NBCU and Sky in Europe), the chances Comcast will deliver blockbuster returns are slim at this stage of its existence.

However, the company does continue to grow at a steady rate. And more importantly, its profitability is on the rise despite competitors to its media and telecom empire.  

Sure, free cash flow did fall 10% year over year in Q1 to $4.76 billion, but that metric can be unpredictable from quarter to quarter depending on capital spending outflows to support various projects (internet infrastructure upgrades, TV joint ventures, movie studio content creation, theme park improvements, etc.). But for the full year, this metric is likely to average a high-single-digit percentage increase this year and for the next few years as Comcast steadily chugs along. Comcast returned nearly all of that free cash flow via dividends and stock repurchases in the quarter.

After the sell-off, Comcast stock now trades for a meager 11.6 times trailing 12-month free cash flow, pays a 2.7% dividend yield, and frequently repurchases stock as an added bonus. If steady growth and investment income are what you desire, Comcast shares are on sale right now.