SiriusXM (SIRI 1.08%) may be one of the more difficult stocks for some investors to understand. Berkshire Hathaway certainly likes it, as it accumulated about 37% of its outstanding shares while Warren Buffett was at the helm.
However, subscribers are leaving the platform, and its stock is down more than 60% over the last five years. Knowing those facts, is there something in SiriusXM stock that only Buffett's former team sees, or should investors pass on this name?
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The state of SiriusXM
SiriusXM offers considerable surface-level appeal. It holds a legal monopoly on satellite radio within the U.S. With that, the company has leveraged new car sales and exclusive contracts with stars such as Howard Stern and Andy Cohen to attract subscribers.
Moreover, SiriusXM can look like a great holding for income-oriented investors. Its yearly payout of $1.08 per share amounts to a dividend yield of 5.3%, an attractive return considering the S&P 500 average yield of just 1.1%.
Additionally, SiriusXM can afford that payout. In the first nine months of 2025, the company generated $715 million in free cash flow. That is well above the $274 million in dividend costs over the same period, making a dividend cut less likely.
Furthermore, Buffett always liked to pay a fair price for a great company. Considering its P/E ratio of just above 7, he and his team might have thought that was an appealing price, considering its monopoly and the dividend income.
Unfortunately for SiriusXM bulls, this is where the appeal ends. Customers can get around the monopoly through wireless internet connections offering content. While SiriusXM also offers streaming, its competitive advantage does not appear to extend beyond exclusive content. Additionally, its strategy of obtaining customers through new car sales is becoming less effective as new vehicles become less affordable.
Consequently, its subscriber base in the third quarter of 2025 was 33 million, a 1% yearly decline. That trend is not new, and it led to the aforementioned stock price decline over the last five years.
NASDAQ: SIRI
Key Data Points
Looking at its business, the company appears to have difficulty convincing investors that it has options for growth. Even when evaluating SiriusXM's exclusive content, it seems better suited to maintaining subscriber levels than generating growth, leaving the company with no obvious path to drive sustained increases in its subscriber base.
Is SiriusXM worth owning?
Considering the state of the company, SiriusXM looks like a buy, but only if one is an income investor. The 5.3% return on the dividend is compelling. Also, at a valuation of just 7.6 times earnings, the stock is unlikely to have much further downside.
However, SiriusXM's satellite radio monopoly does not give it a compelling competitive moat, and with widely available options for streamed media, fewer customers feel compelled to pay for a SiriusXM subscription. Thus, unless one buys the stock for the dividend, investors should probably avoid owning shares of this company.
