Why Did Time Warner Declare an Increase in Dividends?
What Part of Time Warner's 4Q15 Results Pushed Down the Stock?
Dividends and share buybacks
Time Warner (TWX) announced on February 10, 2016, that it’s increasing its regular quarterly dividend by 15%. The company declared a quarterly dividend of $0.40 per share in fiscal 4Q15 payable on March 15, 2016. On an annualized basis, Time Warner expects its dividend to increase from $1.40 per share to $1.61 per share.
The company also announced a share repurchase worth $5 billion that began on January 1, 2016. Time Warner has a trailing 12-month dividend yield of 2.3% and an average dividend yield of 2.1% in the past five years. The company’s peers, including The Walt Disney Company (DIS), CBS (CBS), and 21st Century Fox (FOXA), have average dividend yields of 1.2%, 1.0%, and 0.79%, respectively.
Shareholder returns and stock trends
On February 10, 2016, the last trading price for Time Warner was $60.07. The company’s stock was trading 14.2% below its 20-day moving average of $70, 11.7% below its 50-day moving average of $68, and 14.2% below its 100-day moving average of $70.
Moving average convergence divergence
A company’s MACD (moving average convergence divergence) is the difference between its short-term and long-term moving averages. Time Warner’s 14-day MACD of 0.57 shows an upward trading trend, as the figure is positive.
Time Warner’s 14-day RSI (relative strength index) is 34, which shows that the stock is somewhat overbought. If a stock’s RSI is above 70, it indicates that the stock has been overbought. An RSI below 30 suggests that a stock has been oversold.
Analyst recommendations
Of the 38 analysts covering Time Warner, 28 have given it a “buy” recommendation, and none has given it a “sell” recommendation. Ten have given it “hold” recommendations. The analyst stock price target for Time Warner is $83.77, with a median target estimate of $82. Time Warner is trading at a discount of 36.5% with respect to its median target.
Time Warner makes up 0.29% of the iShares S&P 500 Index (IVV). For an investor interested in exposure to computers, IVV has 3.9% exposure to the sector.
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