There is an upside to falling stock prices


Investors certainly want to see the prices of the stocks they own go up. But while potential growth is the main reason to invest in a stock, there’s also a payoff from dividends. Not a lot of broadcasting stocks pay a cash dividend, but for those who do the yields are becoming more impressive with the recent economic fears pushing prices down.

Far and away the highest yield in the broadcasting space is Sinclair. It was only in March that the TV group owner resumed paying a dividend after suspending the payout for two years during the recession. At Friday’s closing price Sinclair’s dividend payments of 48 cents per year (12 cents quarterly) amounts to a yield of 6.2%. That’s a better return than you’re likely to find from a CD or bond – however with the higher risk that goes with a stock.

Meredith is also paying an attractive dividend at Friday’s stock price: 4.2%. And Belo is close behind at 3.8%. Belo is another company that resumed paying a dividend this year after a hiatus during the recession.

What other companies in radio and/or TV pay a dividend? Time Warner’s yield is 3.3%, Gannett 3.2%, Washington Post 2.8%, McGraw-Hill 2.7%, Viacom 2.4% and Comcast 2.2%.

We also found five others, but their yields are below 2%: CBS 1.8%, Arbitron 1.3%, News Corp. 1.2%, Lincoln Financial 1% and Scripps Networks Interactive 1.0%.

RBR-TVBR observation: The risk is always that a company will reduce or suspend its dividend payment, as several did during the recession. That doesn’t trigger a default like failing to make an interest payment on a bond. But if a company looks sound the yields are attractive in this environment.