Gannett Co. And Its Massive 11%-Yielding Dividend

Jan. 23, 2020 8:47 AM ETGannett Co., Inc. (GCI)17 Comments
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Summary

  • Gannett Co. is a massive newspaper/digital media holding company formed by a massive merger at the end of 2019.
  • The company pays a huge dividend that yields 11%. Despite the outsized yield, the dividend is actually well funded based on projected 2020 cash flows.
  • The stock is speculative based on high degrees of risk from needed cost cuts and a rapidly declining newspaper industry. However, success in reaching management's goals presents upside.

As media/news consumption continues to be increasingly digital in these modern times, the newspaper industry has been steadily eroding. This industry was ruffled at the end of 2019 when two massive players in New Media and Gannett merged to form what is now trading under the name Gannett Co. (NYSE:GCI). While the industry continues its secular decline, Gannett Co. is a newly formed behemoth that the investment community may not be sure what to do with yet. Most investors eyeing Gannett may desire its hefty dividend payment that yields a whopping 11% on its current stock price. While huge dividends (especially those paid by companies in a fading business model) often pose risk, the dividend is currently surprisingly sustainable based on short-term guidance from the company. We dive into what the new Gannett Co. looks like, explore this large dividend, and point out risks that investors need to consider.

A New Titan In The Newspaper Industry

The marriage of New Media Investment Group and Gannett was a merger so large that it had to gain antitrust approval from the Department of Justice. The merger gives Gannett Co. a virtual nationwide footprint through the company's publishing of USA Today, as well as exposure to 47 states via more than 200 publications. The company is a mix of printed and digital products.

Source: Gannett Co., Inc.

Given how many businesses in the newspaper industry have struggled with the transition from printed ad revenue to monetizing digital models, industry consolidation makes sense. The Gannett-New Media merger simply took consolidation to a massive scale. The newly formed entity will generate roughly $4 billion in annual revenues.

A Look At Gannett's Massive Dividend

The leading attraction for most potential investors will be a sizable dividend that Gannett now pays. The dividend is paid quarterly and

This article was written by

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I provide straight forward insights on stocks and markets using fundamental analysis and common sense. - Bachelor's degree in Business Administration with a concentration in Financial Analysis. Been investing and following the markets for more than a decade.- Wealth Insights is an investor, and investment author. His content is not geared to anyone's specific investment goals, time horizons, or risk tolerance. Content is for illustrative purposes only, and is not intended to displace advice from a fee based financial adviser. It is not to be taken as investment advice, or influence investor decision making. Accuracy of data is not guaranteed.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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