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Is Walt Disney Stock a Buy After Announcing a 50% Dividend Increase?

The Walt Disney Company (NYSE: DIS) recently posted its first-quarter results for fiscal 2024 while also announcing a significant 50% increase in its cash dividend to $0.45 per share. This move marks a notable pivot in Disney's strategy, reflecting confidence in its operational strength and future cash flow prospects. But does this make Disney a compelling income stock for investors?

Disney reported revenue of $23.5 billion, which was flat from the prior-year period. However, the company’s diluted earnings per share (EPS) rose from $0.70 to $1.04, underscoring the efficiency and cost reduction measures Disney has undertaken over the past year. The company is on track to meet or exceed its ambitious $7.5 billion annualized savings target by the end of fiscal 2024.

What was particularly notable was its improvements in its direct-to-consumer segment, reducing operating losses by nearly $300 million versus the prior quarter.

Not only did Disney announce a big dividend increase, but it also plans to buy back $3 billion in shares during fiscal 2024. For investors, that means they can benefit from the recurring income a dividend offers while share repurchases can help lead to a stronger stock price, potentially resulting in better long-term returns for investors.

Although Disney increased its semi-annual dividend payment, at $0.90 for the full year, it’s still a relatively modest yield of 0.8%. There are better options out there for dividend investors. And with Disney still ongoing many changes in its business and a lot of uncertainty ahead, this isn’t the safest stock to be owning right now. As a result, investors are better off taking a wait-and-see approach with Disney.