Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Will Comcast Corporation Raise Its Dividend in 2016?

By Daniel B. Kline - Jan 9, 2016 at 11:11AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company has done the same thing year after year, but there are some extenuating circumstances this year.

Comcast ( CMCSA -1.29% ) has had a rough year.

The company had to drop its bid to acquire Time Warner Cable (NYSE: TWC) for $45 billion in April after the Federal Communications Commission made it clear it would not approve the merger. To make matters worse Comcast had to watch TWC agree to be acquired by Charter Communications ( CHTR -1.31% ) in a deal that should win approval, if only because Charter does not have quite as awful a reputation with the general public as Comcast does.

In addition to losing a merger, which might have helped the company continue to dictate terms as a near-monopoly in many markets, it also spent 2015 dealing with the same woes as the rest of the pay television industry. On the negative side, while it did not reach the numbers some predicted, cord cutting has become a real issue. On the positive, cutting the cord requires quality broadband service.

That puts Comcast in an odd position as we start 2016. The company is still not liked by a lot of the public and that may cause increasing numbers of subscribers to consider dropping cable. But, it will also force those same customers into making sure they have good broadband and for some Comcast will be there only choice.

As Comcast decides what to do with its dividend for the new year, it must factor in the likely decline of its cable business and its potential growth as an Internet service provider.


A look at the business
Comcast gained 24,000 cable subscribers in Q1, lost 69,000 in Q2, and dropped another 48,000 in Q3, according to numbers from Leichtman Research Group (LRG). That's a relatively minor loss of 93,000 pay-TV customers for the first three quarters of 2015 for a company that closed Q3 with over 22.25 million cable subscribers.

In broadband the company gained 407,000 paying users in Q1, added another 170,000 in Q2, and tacked on 320,000 more in Q3, according to LRG. That's nearly 900,000 new broadband connections, more than a third of the roughly 2.2 million adds for the industry as a while during the first three quarters of 2015.

Put together those two numbers give Comcast a fairly rosy picture. It may lose cable customers, but it's likely to add many more broadband users than it loses if these trends hold up. Given this, even with the lingering disappointment over the quashed Time Warner Cable deal, there is no reason to believe the company won't do what it always does when it comes to its dividend -- raise it slightly.

Comcast's dividend history
Since first offering a dividend in 2008, Comcast has raised the annual payout slightly each year. Last year the company paid $0.25 per share each quarter, up from $0.225 for the four quarters in 2014. That follows similar increases in each of the years preceding this one since the company instituted the dividend.

So, even in a somewhat unsteady business environment where it may have a new, large competitor in Charter should the Time Warner Cable deal go through, Comcast will almost certainly increase its dividend in 2016.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Comcast Corporation Stock Quote
Comcast Corporation
$48.94 (-1.29%) $0.64
Charter Communications, Inc. Stock Quote
Charter Communications, Inc.
$642.07 (-1.31%) $-8.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.