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What are we looking for?

Sustainable dividends from video-streaming services tapped into stay-at-home consumers.

The screen

Walt Disney Co. reopened its Shanghai theme park this week, while the COVID-19 pandemic keeps its U.S. and other properties shuttered – and its revenues down. The runaway success of its recently launched Disney+ streaming service has partly made up for those losses, but not enough to keep the company from suspending its dividend.

Still, other firms that are plugged into rising demand for streaming content keep rewarding investors with sustainable dividends. Their payouts are bolstered by stay-at-home guidelines, but the biggest players in the market also have a wide base of other business to support dividends.

Story continues below advertisement

Our search started with Canadian and U.S. dividend payers with popular streaming services. (Note: Netflix doesn’t pay a dividend.) From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
  • One point for an industry leader;

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated six stocks. NBCUniversal, a subsidiary of leading U.S. cable TV provider Comcast Corp., launched its Peacock streaming service on a limited basis last month. Telecom giant AT&T Inc. is set to launch HBO Max. Canada’s BCE Inc. offers video streaming through Crave. Created through last year’s big merger, ViacomCBS Inc. aims to build on its CBS All Access platform to launch a major new streaming service. To enter the fray, Fox Corp. is acquiring streaming service Tubi and its content. Apple Inc.’s Apple TV+ launched late last year.

We advise investors to do additional research on any investments we identify here.

Six video-streaming services with dividend opportunities

Ranking*CompanyTickerDividend Sustain. RatingPointsDiv. Yld. (%)Mkt.Cap. ($ Bil.) **Recent price ($) **1Y Ttl. Rtn. (%)
1BCE Inc.BCE-THighest116.150.754.65-8.7
2Apple Inc.AAPL-QHighest111.11,349.80307.6565.7
3AT&T Inc.T-NHighest107.4207.528.09-7.8
4Comcast Corp.CMCSA-QAbove Average92.616134.97-17.3
5ViacomCBS Inc.VIAC-QAbove Average85.711.216.85-64.3
6Fox Corp.FOX-QAbove Average81.915.124.06-35.8

Dividend Advisor

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

**Share price and market cap are in native currency.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

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