It's been a year since I made five predictions for Walt Disney (DIS -0.04%) investors for 2023. I didn't get them all right.
- I predicted Disney+ would increase its subscribers in fiscal 2023 despite raising prices. It fell short, largely on a slide in India.
- My call for Disney shares moving higher in 2023 did play out, even if the 4% gain is well short of the market's return.
- As widely expected, CEO Bob Iger extended his contract.
- I was calling for the world's leading theme park operator to announce a fifth gated attraction in Florida. That did not happen.
- I figured Disney wouldn't unload ESPN despite armchair analysts calling for the media giant to cut its costly sports network loose. It's still around.
I was correct in three out of my five predictions. If you're willing to give me another shot, I have some more prognostications for the entertainment stock bellwether in 2024.
1. Disney stock will beat the market in 2024
I realize that just calling for Disney shares to move higher in 2023 may not seem like a big win for me. The stock inching 4% higher in the calendar year fell well short of the general market's 24% bounce. I'll go from making an absolute prediction to making a relative one. Disney's stock return will beat the market in 2024.
This is a bigger deal than you probably think. It's been a disappointing three years for shareholders inside the House of Mouse. The stock fell 15% in 2021 and plummeted 46% in 2022, and the 4% gain last year was practically a rounding error. Disney shares have lost to the market for three consecutive years. My first prediction is that Disney will beat the S&P 500 this year.
Image source: Disney.
2. A Disney movie will top $1 billion in global box office receipts
Last year wasn't great for Disney at the local multiplex. Just two movies put out by any studio topped $1 billion in worldwide ticket sales, and Disney wasn't the one behind Barbie or The Super Mario Bros. Movie. It's the first time since 2014 -- if you give the industry a mulligan for 2020 when theaters were shuttered and studios pulled high-profile releases -- that Disney failed to generate a 13-figure haul from a theatrical release.
There are some interesting contenders on the Disney slate this year. There will be releases from the Inside Out, Deadpool, and Lion King franchises. The original Inside Out rang up $858 million in box office receipts. The first two Deadpool films nearly reached $800 million apiece. Any of those two 2024 sequels can crack $1 billion at the multiplex in a kind economy. Then we get to the king of the jungle.
The Lion King's live-action remake in 2019 topped $1.6 billion in global receipts. It's true that Mufasa: The Lion King isn't a sequel. It's an origin story for Simba's dad, who -- spoiler alert -- was killed in the original movie. The Toy Story origin story Lightyear was a theatrical dud in 2022. I think the audience reaction will be more favorable this time.
3. Disney will hike its new dividend
It took Disney four years to resume the distributions it suspended when the global pandemic threatened its business. The market isn't exactly impressed by the semiannual dividend of $0.30 a share, which translates into a pedestrian 0.7% yield. With top money market yields hovering around 5%, it's not giving income investors goosebumps. However, Disney has never been a high-yielding stock.
Disney's previous payout was $0.88 a share every six months. Disney seems to have intentionally reintroduced its dividend at a low rate, giving it a high ceiling for subsequent boosts. It would be shocking if the distributions don't move higher by the end of this year, and possibly a sign that the recovery isn't going according to plan. So yes, there's a lot riding on the payout inching higher this year.
