For those who bought in when America Online and media entertainment giant Time Warner
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
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
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:
- Time Warner produced a respectable March quarter.
- Revisit AOL's glory days.
- It's not too late to save AOL.
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 the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.