All eyes are on CBS
First, there's the dividend increase. CBS used to pay $0.22 per share per quarter. Now, shareholders will receive $0.25 every three months. Three little pennies don't sound like a lot, right? Put it in percentage terms, though, and you've got a double-digit hike -- roughly 14%.
Onto the buyback -- it has a potential value of $1.6 billion. Furthermore, CBS would like to see this done at an accelerated pace. CEO Les Moonves is clearly high on the future prospects of his media assets. He appears confident in the company's ability to deliver sustainable free cash flows, and he appears willing to court long-term holders for CBS shares.
Fools who are interested in the media sector, as well as dividend investing, will definitely want to take a look at CBS. Not only would they gain exposure to excellent properties like Showtime, The CW -- a joint venture with Time Warner
While I like the long-term potential of other media plays such as Lions Gate Entertainment
But CBS can do that. According to the latest 10-K filing, CBS has grown its net cash flow from continuing operations the past few years. In 2004, 2005, and 2006, continuing operations provided $1.6 billion, $1.8 billion, and $2.0 billion of cash, respectively. Since CBS' capital expenditures aren't hefty, a significant portion of these sums are able to flow to the free side of things. Seeing CBS use a portion of that capital for a larger dividend and a share buyback spells good news for investors.
When Sumner Redstone decided to split his old Viacom
Read on for related Foolishness: