Disney: Issuing The Dividend Is An Inefficient Way To Allocate Capital

Summary:

  • Disney’s decision to reinstate the dividend is questionable given the company’s recent struggles.
  • The $1.10 billion dividend could have been better allocated to invest in Disney+ to make it profitable, invest in quality content, improve the theme parks, or reduce debt.
  • The dividend may not have a significant impact on shareholders and does not address the underlying problems facing the company.
Walt Disney In Dublin

Keystone

Context

Until the early 2000s, Disney (NYSE:DIS) was one of the most dominant companies in the world: its brand was very strong thanks to successful productions and proper administration of the parks. Everyone was crazy about Disney, including me to be honest.


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