If we’re being blunt, Disney’s stock has been underperforming this year.

With the low cost per share, shareholders have been unimpressed. But recently, Disney reinstated cash dividends as a way to build trust with investors. Amid the pandemic, Disney had removed the dividends, but now, three years later, they are back as a way to entice shareholders who have stock in the company. But was that the right move on Disney’s end? Some may not think so.

According to a stock market analyst from the Motley Fool, there may be better ways to earn shareholder’s trust instead of handing out cash dividends. We’re fans of dividends, so hearing this perspective was a bit of a surprise. But here’s why they suggest that this might not have been the play for Disney.

Disney has had a tough go at it since the pandemic. When the parks and theaters closed to encourage social distancing, they took a hit, which caused them to pull the dividends in the first place. This was certainly unfortunate for investors. Since everything has reopened, including Shanghai Disney in 2023, the business is doing better, but it’s not out of the woods yet, according to the writer on Motley Fool.

The movie content Disney has been putting out has not been as well received as previous movies. And, according to the end-of-the-year reports by Disney, the parks aren’t performing at their best ability. It seems they still have some work to do to make up for the pandemic losses. All in all, with the performance of the company being sub-par in its current state, many may think that this was not the right time to give back the dividends.

It seems the company is still working on overcoming a few hardships, and according to the analyst, “the $0.30-per-share dividend is a burden that Disney didn’t need to impose on itself.” It may be one way to regain trust amongst investors, but there may have been other, better, ways of doing that, such as working on bettering the business strategies for experiences. Some may argue that Disney has some work to do outside of handing out dividends.

It’s possible that the dividends could cause more harm than good. But we will have to wait to find out just how it will affect the company, its stock, and the investors in 2024. If you are a Disney stockholder, you can expect to receive your cash dividend on January 10th, 2024.

In the meantime, keep following DFB for more Disney news!

 

The post NEWS: One Analyst Claims That Disney Is Making a Big Financial MISTAKE first appeared on the disney food blog.