Best Entertainment Stocks With Good Dividends
Key Takeaways
☑️ Certain entertainment stocks offer attractive valuations
☑️ Most companies are large diversified media groups
☑️ The pandemic hit the resort segments hard
☑️ My favorite dividend-paying entertainment stock is Disney
The Largest Entertainment Stocks
The largest entertainment stocks by market cap are all from the U.S. Only two European media companies make it into the top 9: RTL and ProSiebenSat1.
| Company | M. Cap in Bio $ | Sales in Bio $ | PS |
| 🇺🇸 Disney | $185 | $84 | 2.2 |
| 🇺🇸 Netflix | $144 | $32 | 4.6 |
| 🇺🇸 Universal Music | $43 | $10 | 4.2 |
| 🇺🇸 Warner Bros | $38 | $26 | 1.5 |
| 🇺🇸 Fox | $19 | $14 | 1.3 |
| 🇺🇸 Sirius XM | $17 | $9 | 1.9 |
| 🇺🇸 Paramount | $15 | $30 | 0.5 |
| 🇪🇺 RTL | $7 | $7 | 1.0 |
| 🇪🇺 ProSiebenSat 1 | $2 | $5 | 0.5 |
And here are the largest ones by sales and revenues:
| Company Name | Sales in Bio $ |
| 🇺🇸 Disney | $84 |
| 🇺🇸 Netflix | $32 |
| 🇺🇸 Paramount | $30 |
| 🇺🇸 Warner Bros | $26 |
| 🇺🇸 Fox | $14 |
| 🇺🇸 Universal Music | $10 |
| 🇺🇸 Sirius XM | $9 |
| 🇪🇺 RTL | $7 |
| 🇪🇺 ProSiebenSat 1 | $5 |
We can see that two entertainment stocks have price-to-sales of less than 1: Paramount (owned by Warren Buffett), and Germany-based ProSiebenSat1 (which I own besides Disney and Warner Bros).
Entertainment Stocks Owned by Warren Buffett
Warren Buffett is known to like entertainment stocks. He is a long-term holder of the following companies:
- $PARA – Paramount
- $SIRI – Liberty Media (a complex media conglomerate with 9x ticker symbols)
- $CHTR – Charter Communications
Those do not represent a big bulk of Berkshire Hathaway’s holdings, but Buffett has been a loyal shareholder for basically decades in some cases.
Dividend-Paying Entertainment Stocks With Low PEs
Let’s now look at the dividend-paying entertainment stocks with the lowest profit/earning ratios (PE) and their respective dividend yields:
| Company | Yield % | PE |
| 🇪🇺 RTL | 7.7% | 10 |
| 🇺🇸 Fox | 1.5% | 12 |
| 🇺🇸 Sirius XM | 2.1% | 15 |
| 🇺🇸 Paramount | 4.1% | 15 |
| 🇺🇸 Netflix | 0.0% | 33 |
| 🇺🇸 Disney | 0.0% | 56 |
| 🇺🇸 Universal Music | 1.9% | 59 |
| 🇪🇺 ProSiebenSat 1 | 8.5% | 64 |
| 🇺🇸 Warner Bros | 0.0% | At Loss |
Of the 10 biggest entertainment stocks, by market cap, eight are from the U.S., two are from Europe. About six of them pay dividends. One of the highest dividend-paying entertainment stocks is ProSiebenSat1, a company I hold in my All-Weather Portfolio.
Some of the stocks listed above are reasonably valued, with PEs below 15, some or a bit pricey at the moment.
Entertainment Stock’s ROA + ROIC
| Company | ROA % | ROIC % |
| 🇺🇸 Sirius XM | 12 | 15 |
| 🇺🇸 Universal Music | 6 | 13 |
| 🇺🇸 Fox | 7 | 12 |
| 🇪🇺 RTL | 7 | 12 |
| 🇺🇸 Netflix | 10 | 11 |
| 🇺🇸 Paramount | 2 | 5 |
| 🇺🇸 Disney | 2 | 2 |
| 🇪🇺 ProSiebenSat 1 | 1 | -1 |
| 🇺🇸 Warner Bros | -7 | -3 |
It’s difficult to compare apples to apples. Disney for example is a fundamentally different company from e.g. Netflix.
With the global pandemic hitting its hotel and resort business segments profoundly, Netflix can be considered one of the key beneficiaries of people being stuck at home.
🏆 My Top Pick
My top pick for the best dividend-paying entertainment stock is Walt Disney (DIS).
This point of view might not be entirely unbiased.
When I was 14, I had the dream to make enough money to be able to live “in” Disney World. My visit to Disney World in Orlando, Florida, had a huge impact on me. Everything from the hotel to the entrance, to Epcot Center, to the food, the music, and the people.
As a young teenager, it felt like stepping into a different world, and I loved every second of it.
So clearly I am a big fan of what Disney represents, and that is till today.
Let me share my basic thoughts on why Disney is the perfect entertainment stock to hold for ‘ideally forever’.
Unparallel Brands & IP Portfolio
Disney owns arguably the most valuable and diverse portfolio of movie franchises and IP in the world:
- Disney (Mickey Mouse, Frozen, ..)
- Pixar (Toy Story, Monsters, ..)
- Lucas Films (Star Wars, Indiana Jones, ..)
- Marvel (X-Men, Thor, Hulk, Antman, ..)
- ESPN, History Channel, ABC, Touchstone Pictures, ..
This deep fundus of IP can be utilized for movie making, gaming, comics, cartoons, merchandise, VR/AR experiences, movie parks, etc.
Business Segment Diversification
Disney is a well-diversified company in terms of business segments, making about
- a third with media networks,
- a third with parks & resorts,
- 16% with studio entertainment, and,
- 13% with DTC, its Direct-to-Consumer segment
A good and balanced mix and well diversified.
Geographic Diversification
Disney is everywhere. Offline as well online. From Frozen-themed school bags in Tokyo to mobile games in South America or toys in Africa. It’s loved everywhere.
In my point of view, the most beautiful park is Disneyland in Hong Kong (Bog Iger thinks so as well).
Disneyland Paris is nice, the newest one in Shanghai as well, and so far I have not been to Disneyland Tokyo.
Disney makes a lot of money with merchandising products. It typically licenses its IP to a third party, which focuses on manufacturing and distribution.
Disney also licenses its brand IP to thousands of digital products such as games, ed-tech, etc., and receives royalty payments from its music catalog.
Family Entertainment
Disney’s movies are famous for being loved by almost many cultures and in many regions.
Its movies appeal to the whole family, and often you see grandparents taking their grandchildren to visit a park or watch a movie!
Although I am in my 40s, I still love watching every new Pixar movie with my kids once it is released.
People perceive the world today as uncertain and sometimes even ‘ugly’. By offering family-friendly entertainment, Disney helps families to escape from an often harsh reality. An important contribution to many people’s lives.
Disney Stock Dividend
Disney has been a reliable dividend payer for decades, see the below chart.
The blue line indicates the dividend per share, reaching about 2 USD prior to the pandemic. Between 2015-2020, Disney’s dividend yield was ranging between 1.5 – 2%.
Then the pandemic hit Disney, hard. All of its resorts and hotels had to close, causing billions in losses.
The company could partly compensate for this with the launch of its Disney+ streaming service, but the financial hit was too large, thus the bi-yearly dividend was paused.
I believe this to be just temporary, and I believe the Disney stock dividend to be reinstated in 2024.
Launch of Disney+
Disney+ is the Netflix-like streaming service that the company launched in late 2019.
Its launch was a big success. As of Q1 2023, Disney+ has more than 162 Mio subscribers, making it the 2nd largest streaming service in the world.
The service costs 15 USD, meaning Disney generates 2,4 Bio USD of revenues – per month!
This proves that although its a very large company, it can launch new product verticals in an effective and efficient manner.
Financial Resources
Although the last 2020-2022 were challenging years for the company, it remains a financial powerhouse with deep pockets.
Let’s take a quick look at Disney’s balance sheet:
The company sits on 203 Bio USD of total assets.
With a market cap of 180 Bio USD and revenues of 80 Bio USD, the company has financial resources smaller firms can only dream about.
Magnet Of Top Talents And Artists
Disney, with its flagship production units like Pixar, Lucasfilm, or Marvel attract the world’s best movie-making talents.
Its IP catalog consisting of iconic brands such as Mickey Mouse or its entire Marvel catalog has a magnetic pull, as it’s often a childhood dream for many artists to produce work for those brands they love from a young age.
Disney’s Ecosystem
Founder Walt Disney was a visionary maverick, who had a clear picture in his mind of what kind of company he wanted to build.
Look at the below chart to see what I mean.
Simply put, all divisions support each other, resulting in a cross-population across the entire ecosystem.
- a new movie IP such as Raya and the Last Dragon gets created
- it’s made into cartoons & book
- the resorts get a princess Raya ride, attracting millions of fans
- a free-to-play mobile game is launched
- Raya merchandise gets sold everywhere
- etc.
All of the above with a laser-sharp focus on family-friendly entertainment.
And now look at this image, showing all companies that Disney owns:
Beautiful Resort & Hotel Experiences
As a father of two young kids, I can tell you that visiting a Disney hotel resort with your kids is a beautiful experience.
We recently visited Disneyland Hong Kong. The hotel was stunning (right next to the sea). Our Kingdom Theme Suite was worth every penny. The park itself was amazing (in the middle of a beautiful hilly forest).
We loved every second of it.
It’s this multi-layer experience that Disney provides that makes it an amazing company.
Conclusion
Disney is a unique company that would take decades to build from scratch.
Its world-class IP catalog, creativity, resorts, hotels, financial prowess, staying power, endless innovation, and focus on family-friendly entertainment, make it my favorite (soon to be again) dividend-paying entertainment stock.
I am happy to own it in my dividend portfolio and will hold it for decades to come.
📘 Read Also
- 5 Reasons Why Warner Bros Is A Longterm Hold For Me
- The 7 Best Video Game Stocks To Buy
- The 3 Best Ways To Invest In The Metaverse
FAQ
What was Disney’s most successful movie?
Disney’s most successful movies in terms of box office revenue are Avatar ($2.85B) and Avengers: Endgame ($2.8Bio).
What entertainment stocks to buy?
Start by looking at the dominant players in this space:
🇺🇸 Disney with $84 in sales
🇺🇸 Netflix with $32 in sales
🇺🇸 Paramount with $30 in sales
🇺🇸 Warner Bros with $26 in sales
Also, look at the PE ratios. The best dividend-paying entertainment stocks are popular among income investors, and you need to be patient when investing in them.
What are communication services stocks?
Communication services is often another name for diversified media or entertainment stocks. The largest communication services stocks are Disney, Paramount, Fox, Netflix, and Warner Bros.
Where to check entertainment stock prices?
There are many websites offering live stock charts of the best entertainment stocks. Some investor favorites are Yahoo Finance, Google Finance, or Seeking Alpha.
What are undervalued entertainment stocks?
To find undervalued entertainment stocks you can look for stocks with low price-to-earnings (PE) ratios. Below 14 is typically considered to be undervalued. There are some European entertainment stocks such as ProSiebenSat1 or the RTL Group that currently have PE ratios with single digits while paying +8% dividends per year.
Where to find an entertainment stocks list?
One good site to get an entertainment stock list is Companiesmarketcap, allowing you to list/rank all companies within one category.
What is a good media or entertainment ETF?
There are two media ETFs, or entertainment stock ETFs, I like:
– XLC Communication Services Select Sector SPDR Fund
– PBS Invesco Dynamic Media ETF Consumer Discretionary
What are high-dividend entertainment stocks?
Three high dividend entertainment stocks in 2023 are for example the following three:
– 🇪🇺 ProSiebenSat1 with a dividend yield of 8.5%
– 🇪🇺 RTL with a dividend yield of 7.7%
– 🇺🇸 Paramount with a dividend yield of 4.1%
Who won the streaming war?
Netflix is still the largest streaming service judging by the number of subscribers. But Disney played a lot of catch-up, already reaching 160 Mio subscribers within the first three years of operation. So far, there is no winner yet.
Top Pick Review
Its world-class IP catalog, creativity, resorts, hotels, financial prowess, staying power, endless innovation, and focus on family-friendly entertainment, make it my favorite (soon to be again) dividend-paying entertainment stock.
PROS
- Unparallel Brands & IP Portfolio
- Business Segment Diversification
- Geographic Diversification
- Family Entertainment
- Disney Stock Dividend
- Launch of Disney
- Financial Resources
- Magnet Of Top Talents And Artists
- Disney’s Ecosystem
- Beautiful Resort & Hotel Experiences
CONS
- High Debt
- Not Immune To Pandemics
- Not Easy To Remain Innovative As a Huge Company
- Constantly Needs To Be Innovative & Create New IP
- Fierce Competition (Streaming Wars!)
wpDiscuz
Age when reaching FI: 40 in 2018
Left the rat race: May 2017
Living in: Singapore
Number of kids: 2
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