The board of directors of
Scripps Networks Interactive Inc.
) recently announced a hike in the company's quarterly cash
dividend by 3 cents or 25% to 15 cents per share on its common
stock. This will translate into an annualized cash dividend of 60
cents per share. The company will pay the dividend on Mar 8, 2013
to shareholders of record at the close of business on Feb 28,
This is the company's third dividend increase during the last
two years. The company has been paying dividends uninterruptedly
for the last few years. The recent hike will cost Scripps nearly
$22.5 million each quarter, provided it does not issue or
repurchase any further shares thereby resulting in a dividend
yield of 0.97% as compared to 1.09% for the industry. However,
the market did not react positively to the news as the stock
price fell by 17 cents to close at $9.87 at the close of trade on
Scripps has sufficient cash to carry out this dividend hike
program. The company exited the fourth quarter of 2012 with
$437.5 million of cash and marketable securities on its balance
sheet. During 2012, Scripps Networks generated $614.7 million of
cash from operations compared with $728.9 million in 2011.
Scripps' record of paying regular dividend is far better than
some of its rivals like
LIN TV Corp.
Discovery Communications Inc.
), which have not paid any regular dividends in the last four
Entravision Communication Corp.
) has only paid two cash dividends in the last two years.
Recently, Scripps reported weak financial results for the
fourth quarter of 2012, which fell below the Zacks Consensus
Estimate. Quarterly adjusted earnings per share of 84 cents were
way below the Zacks Consensus Estimate of 91 cents. The company's
quarterly total revenue of $604.7 million also fell short of the
Zacks Consensus Estimate of $617 million.
We believe the company is raising its regular dividend to
match its payout ratio of 10.56% with that of the industry
average, which currently stands at 20.65%. However, we remain
apprehensive about the rising programming costs, which will
increase the cost of operations for Scripps. Increased expenses
might reduce the company's bottom line, thus impacting its
Currently, Scripps Network carries a Zacks Rank #3 (Hold).
DISCOVERY COM-A (DISCA): Free Stock Analysis
ENTRAVISION COM (EVC): Free Stock Analysis
SCRIPPS NETWRKS (SNI): Free Stock Analysis
LIN TV CORP -A (TVL): Free Stock Analysis
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