Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Activision Blizzard Raises Its Dividend by 13%

By Eric Volkman - Feb 16, 2016 at 5:35PM

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 will pay $0.23 per share this year.

What happened?
In contrast to its recent fundamentals, video game purveyor Activision Blizzard's (ATVI 0.91%) dividend is on the rise. Concurrent with the release of its Q4 and fiscal 2015 results, the company said its upcoming annual payout will be $0.26 per share, which is 13% higher than its predecessor.

This despite a Q4 in which revenue and net profit not only dropped on a year-over-year basis, but came in under analyst estimates. The fiscal year's revenue also dropped, although net profit for the time period was modestly higher.

Activision Blizzard has paid an increasingly growing annual dividend every year since 2010. Over that stretch of time, it has advanced from $0.15 per share to the present level.

The new distribution will be paid on May 11 to stockholders of record as of March 30. At the current share price, it yields 0.8%. This is well short of the current 2.3% average of stocks on the S&P 500 index.

Does it matter?
A raised dividend is nice -- particularly when that raise is the highest in a company's history, as in this instance (Activision Blizzard's previous record was 10%). But even at the enhanced level, this payout isn't attractive for yield seekers. Nor should it make much difference to the investing thesis. After all, it's hard for a company to escape the fallout of an earnings disappointment.

In Activision Blizzard's case, that's a shame because from a top-down view, the company is not doing badly, in my opinion. The video game business is much like the film industry, in that it's dependent on big hits. Not every title from the company's release schedule is a big seller, but it always seems to hit the mark with something -- last quarter's example would be Call of Duty: Black Ops 3 -- and in terms of fundamentals, it consistently lands in the black regardless.

In other words, Activision Blizzard is a good company undeserving of its current investor disfavor. A raised dividend, unfortunately, won't change that sentiment to any meaningful degree.

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

Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
$78.57 (0.91%) $0.71

*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 analyst team.

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 07/02/2022.

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

Premium Investing Services

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