Dividend stocks that have low or modest yields may not necessarily be bad options for income investors. What’s important is to also look at their financials and their willingness to raise their payouts when their fundamentals improve.
One stock that recently announced a massive increase to its dividend is TKO Group Holdings (NYSE:TKO), the sports entertainment company that owns the UFC and WWE. On Sept. 3, it declared a quarterly dividend of $0.76 per share, which is double the $0.38 it was previously paying. TKO only began paying a dividend earlier this year but a sharp increase in the payout reflects confidence in its business model and its ability to grow; no company wants to increase its dividend significantly only to end up having to reduce it in the near future.
With the new quarterly dividend, that means TKO is paying $3.04 in dividends per share, over the course of a full year. That translates into a yield of around 1.6% based on where its share price is today. And that’s a better yield than what you’d get with the average S&P 500 stock, which pays about 1.2%.
TKO Group has some great assets in its portfolio in UFC and WWE that resonate with young audiences. And over the trailing 12 months, it has generated just under $3 billion in revenue, raking in a profit of $211 million, for a solid net margin of over 7%.
Shares of TKO Group are up 35% this year and for long-term investors, particularly those who are looking for a good dividend, it could make for an excellent option to consider.
