DIS Stock Could Bounce Back Soon
The Walt Disney Company (NYSE:DIS) is one of the best performing large-cap, blue-chip companies on the S&P 500. Unfortunately, DIS stock has been unfairly getting battered on the market after the news on ESPN’s sliding subscriber base broke out. I strongly believe that Friday’s sell-off in the stock is unwarranted. Here’s why I’m bullish on Disney stock.
1. Disney’s Product Portfolio Is Strong
Disney is an entertainment behemoth, with no other company in the industry that matches up to its size. From film and animation studios to parks and resorts, cable TV networks, cruise lines, consumer merchandise, and music and comic studios, Disney has everything covered in entertainment.
The company’s products have become so ubiquitous that the brand is recognized by old and young in every nook and cranny of the world. With a diversified portfolio like this, the giant remains unbeatable in the market. Disney boasts strong margins with robust top- and bottom-line year-over-year growth. With this kind of size and scope, I don’t see why anybody would want to bet against DIS stock.
2. Star Wars: Enough Said.
Many were initially critical when Disney bought Lucasfilm, the production company behind Star Wars, three years ago. Turns out, Bob Iger got the bet right with the acquisition.
Star Wars is not just a movie series; it’s a phenomenon. Anybody who believes otherwise must have been living under a rock all this time. The latest installment of the Star Wars saga is releasing next month and is expected to be the biggest winner for the company. Star Wars Episode VII: The Force Awakens is expected to smash the box office, grossing over $2.2 billion in revenue and becoming one of the top grossers of all time. (Source: “Here’s how much money the new ‘Star Wars’ movie could make,” Fortune, August 4, 2015.)
The Star Wars brand goes beyond just the movie. Disney is also expected to generate hefty profits from sales of Star Wars merchandise, including toys, clothing, and games. All major retailers were seen loading up their shelves with the brand’s merchandise over this Black Friday weekend. Sales for the merchandise alone are expected to cross $3.0 billion for the year. (Source: “Disney awakens $3b in Star Wars merchandise sales,” Independent, September 4, 2015.) The franchise is certainly going to prove a boon to DIS stock in the coming days.
3. The Dividend Is Solid
Finally, the most striking reason I find Disney stock a lucrative bet is its healthy dividend payout. Disney stock has a solid history of dividends with the payout consistently increasing over the years. As far as my memory goes, the company has religiously stepped up its dividend payout.
The stock’s current dividend yield hovers a little over one percent. The fact that the dividends have historically remained stable makes me consider DIS stock a strong prospective candidate for my retirement portfolio.
The Bottom Line on DIS Stock
Disney stock has returned over 215% in the last five years and over 26% year-to-date. The stock has consistently maintained its northward momentum, far beating the S&P 500 index. With strong fundamentals and a promising upside, I’d be a fool to bet on the wrong side of DIS stock.
As for the shorts who are dumping the stock right now, as Master Ben Obi-Wan Kenobi aptly puts it, “Who’s more foolish, the fool, or the fool who follows him?”