As you might have read about it here, I now do live webinars and certainly have fun doing so. I have been surprised by the positive interest attendees had towards many of my stock picks. This is how I came to the idea of sharing here some of my “Video of the Week”, during wich I go through a company recent news or results and explain why I believe it is currently a good or a bad pick for a dividend investor.
The king of content nerver stops impressing me! Besides being a company about magic, it is a magical stock! In the past 10 years, Disney acquired 3 major companies and is now buying the balance of Fox assets. Discover why it even has an advantage on Netflix!
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00:00 Mike: Hey fellow investors. This is Mike from Dividend Stocks Rocks and welcome to the Dividend Guy Stock Pick of the Week. This week, I wanna talk about a magical stock, magical company, and I’m not talking about the sparkles in my children’s high as when they look at Mickey Mouse and Minnie Mouse. I wanna talk about Disney’s ability to create multiple streams of income, starting from one idea, one character.
00:25 Mike: Over the past decade, Disney has been a pro in acquiring content and then multiplying those content into multiple streams of income. It all started with a 4 billion purchase of Pixar. And then Disney decided to go again and spend another 4 billion to buy Marvel and another one Disney from Lucas Film. So, over the past decade, Disney acquired three major companies, three major content assets. And what is the most amazing thing is now they’re just going forward with buying Fox assets, including movies including the rest of Marvel and including a participation in Hulu which is the second largest streaming service behind Netflix.
01:13 Mike: So the idea with Disney is they’re already the king of content, but once they produce a movie, what they do is that they produce action figures, they produce apparels, they produce all kinds of toys, miniseries, cartoons, and they even include them in their cruises and in their park and resorts. So basically, Disney starting from Star War movie or Marvel superhero, or a princess, and then it duplicates its power through like 20 income streams.
01:48 Mike: What I really like about the Fox deal is Disney is going to launch a new streaming service in 2019. This means that Disney will have now its direct competition against Netflix. But what I like about this idea is that Disney is no fool. They know that they will not offer a better service or more series than Netflix is currently doing instead they’re going to focus on original content that they own. So we’re talking about all the cartoons, the Disney characters, Marvel, Star Wars, Avatar, and so on.
02:23 Mike: And what they will do is that they will offer this small section of streaming probably at $6, $7 a month, so lower than Netflix, just to be a complement to other people because the main problem that Disney had and the main problem in the cable industry is lots of clients, lots of customers are cutting down the cable and watching TV on Internet, so either through streaming services through YouTubes to their tablets or computer, but one thing is for sure, they don’t wanna pay for the cable anymore. So Disney is having a problem with ESPN losing subscribers quarter after quarter, and now they’re moving away their whole business towards streaming for that reason.
03:09 Mike: So they will be able to reach clients. And then what happened is, you used to pay like 70 bucks or 100 bucks a month for your TV, now you’re down to 10 bucks a month because you’re watching Netflix. And then, your kids wants to watch their princesses, their favorite princess or their favorite Star Wars character on a TV too so you might as well jump from 10 bucks a month for Netflix too like 17 or 18 bucks and add a Disney Channel on top of it.
03:37 Mike: So this is what’s gonna happen in the next coming years. The beauty of it is Disney is already creating tons of content and is just using another way to earn income out of it. The old business is supported with strong blockbuster movies year after year. If you look back for the past five or six years, you will find lots of Disney movies in the Top Five, in the Top 10 Box Office. So basically, all the new blockbusters are often Marvel superheroes or Star Wars movies these days. And you can always count on solid Pixar movies to close at Top 10.
04:19 Mike: The company is not offering a huge dividend yield. I agree with that. We’re talking about 1.5%. So for income-seeking investor, this is definitely not the Deal of the Day but think about that Disney has more than double its payout over the past five years. I expect double digit dividend growth going forward because the business is just printing money all the time. So you can expect strong dividend growth plus capital appreciation ’cause no matter where the economy is going, you’re gonna watch TV, you’re gonna pay for your kids because they love Disney characters. So, basically, this company will go very well in the next decade no matter if we enter in a recession or not.
05:07 Mike: I think that the beauty of it is its ability to create all those stream of income coming from one single idea which Netflix cannot do and which any other competitors cannot really do. And this is basically the reason why I hold shares of Disney right now and I might even buy even more going forward.
05:28 Mike: Small disclaimer to finish this video. You cannot take everything that has been said or presented by myself, Mike, or from Dividend Stocks Rocks as a buy or sell recommendation. I am not your financial broker or your financial advisor, therefore you cannot sue me if you lose money after watching this video, but on the good side of things, you won’t have to pay me a dime if you’re making some money. So I hope that you have enjoyed this video. Don’t forget to subscribe. If you wanna have more information about my videos and about stocks that I follow, go on the Dividend Guy Blog and subscribe to my newsletter. I have like very interesting stuff over there, free reports, free stock guides. So I hope that I see you at my next video. In the meantime, happy investing.
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