Gannett Co. Inc. (NYSE:GCI) doubles its dividend. But makes less money. Oxymoronic moment for traditional dividend investors. Print is still in trouble and while digital seems to be improving it still is not doing any heavy lifting.
Dividend coverage ratio must be laughable.
Media is driven by political cycles. This is an off-year. Next year the presidential race is on and so are the big ad buys. The wary investor may conclude a long-term play to turn dividend players into believers when the dividend coverage ratio improves and Gannett can claim improving fundamentals. Or the board senses a coming takeover bid and wants to juice the value with some old school fundamentals.
In any event doubling the dividend on decreasing revenues is a gamblers move. The stock is down in a down market today. Gannett is not a true candidate for dividend aristocrats. Yield investors beware.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.
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- The Extraordinary Power of Dividends: Altria Edition (fool.com)
- Coming to terms: Dividend (seattletimes.nwsource.com)
- Study: Within Four Years, 70 Percent Of All Mobile Ads Will Be Local | paidContent (thedhsblog.wordpress.com)
- How the Election Cycle Will Win For TV & Media (GCI, SSP, JRN, GTN, SBGI, BLC) (247wallst.com)