Call it the “Frozen” dividend.
The Walt Disney Company (DIS) is boosting its annual dividend by a whopping 34%-- raising it by 29 cents to $1.15 a share. CEO Bob Iger credits the company’s 2014 results, which were the best in its history.
Of course, those results got a huge lift from the animated mega-hit movie, “Frozen.” The film helped more than double profits at Disney’s studio segment in the fiscal year.
And Yahoo Finance Senior Columnist Michael Santoli expects Disney to ride that icy wave for some time to come.
“It has a very long tail to it,” he says. “I don’t think this is just a one-year phenomenon.”
The reason for Santoli’s optimistic assessment-- Disney has a lot of experience getting the most out these kinds of popular movies.
“Disney has multiple franchises like this-- Marvel, princesses, Toy Story and all the rest-- that they can mine in multiple ways, like merchandise and rides and perhaps a Disney Channel show,” he notes. “They’re going to mine this franchise, too.”
And for those who think anticipation of a sequel is needed to keep up fan interest, Santoli says, “Let it go.”
“Disney will only do a sequel if they think there’s another story to tell,” he points out. “And from a business perspective, it doesn’t matter terribly much. They’ll have to refresh it in some way, but I don’t know it has to be a full-on theatrical feature.”
Along with its bottom line, Disney shares are on a roll this year, up more than 20%. Santoli says if the company does get off track, it won’t be the fault of the movie division.
“The thing that could challenge Disney is the cable economy,” he suggests. Most of their earnings come from ESPN, Disney Channel and other pay cable products. If that starts to crack and decline, that’s a genuine headwind for Disney.”