Disney is a name that everyone recognizes. Their theme parks are famous for the attractions as well as the long lines. Watching Snow White and Mickey Mouse cartoons has been part of childhood for generations. But, can Disney survive on the revenue from their theme parks and old movies? Aside from the famous name, why buy and hold Disney? The answer lies in one word, content! If you have not been paying attention, here is an update on the venerable and also forward-looking company.
Investing in Walt Disney Company
Walt Disney Company (DIS) has been a part of the Dow Jones Industrial Average since 1991. It was founded in 1923 by Walt and Roy Disney and was called the Disney Brothers Cartoon Studio. After several name changes, the company settled on Walt Disney Company by 1986. Disney “wrote the book” as the dominant figure in the animation industry in the USA and then went on to produce live-action films and television shows. And, they opened their theme parks.
Today, Disney is a mass media and entertainment producer, still headquartered in Burbank, California after nearly a century. Today its stock sells for $130 versus less than $1 forty years ago. Their dividend yield is 1.3% and DIS has a 15 P/E ratio. This is a venerable old entertainment company. But, why buy and hold Disney? After all, Kodak was old and venerable and virtually died when new technology made their business plan obsolete. The difference lies in an analysis of the intrinsic stock value of this company. The acquisitions and changes that they have made over the years ensure a continuing flow of valuable content that will generate profits well into the future.
Investing in Disney for Its Unique Content and Steaming Assets
Although many of us grew up watching the old Disney “family” movies and cartoons, the Disney of today has developed and bought a lot more content with a much broader appeal. Disney now has divisions to manage each of its content sources.
- Walt Disney Pictures
- Marvel Studios
- Walt Disney Animation Studios
- 20th Century Fox
- Fox 2000 Pictures
- Fox Searchlight Pictures
- Blue Sky Studios
- Disney Media Networks
- Disney Parks, Experiences and Products
- Disney Direct-to-Consumer & International
- ABC Broadcast Network
- Disney Channel
- National Geographic Channel
While the timeless Mickey Mouse character is still the “mascot” of Disney, you are watching Disney content when you watch sports on ESPN, the news on ABC, and any of the Star Wars, Avengers, or old 20th Century Fox movies!
In fact, Disney is the majority owner of major streaming services in countries like India.
We are not the only one to think that Disney is well-positioned for the future.
Disney Is an Investment to Hold for 20 Years or Longer
The Motley Fool includes Disney in an article about three stocks to hold for 20 years.
Over the past few years, Disney has been positioning itself to become an even bigger and more dominant force in the media landscape than it already was. One of the first big moves came back in 2009 when the company purchased Marvel Entertainment, giving it ownership of one of the most successful superhero franchises of all time, and access to a seemingly unending list of characters and stories.
Then, Disney made another huge investment in 2012 when it purchased Lucasfilm for about $4.05 billion, giving Disney the massively popular Star Wars franchise and ownership of its characters.
They go on to detail the many acquisitions that Disney has made in order to dominate the world of content. And, they note that Disney has also developed Disney+ which is a video streaming service that will challenge Netflix and Amazon. Not only does Disney have a lock on mountains of old content and the rights to develop new content. They are also positioned to take advantage of the movement of viewers away from standard TV programming and cable to internet streaming.
The bottom line is that Disney is definitely a long term buy and hold investment that belongs in virtually any investment portfolio.