Here's Why WWE Should Drop Its Dividend
WWE (NYSE: WWE) has a dividend -- $0.12 per share in the most recent quarter -- that currently must be paid partly from its cash reserves. The company's net income rose in the second quarter to $10.4 million (or $0.11 per diluted share) from $10 million in the same quarter last year, meaning that its dividend costs WWE more than its entire quarterly profit.
That's not a major concern because revenue will rise sharply with its new television deals. WWE will roughly double its broadcast revenue from just under $200 million per quarter to $400 million when its new deals with Comcast (NASDAQ: CMCSA) and Fox (NASDAQ: FOX) fully kick in.
WWE can afford its dividend since its increased TV revenue, which will be in place for five years, is essentially all profit. The company may spend some of that on retaining talent through higher salaries, but TV rights fees currently account for roughly 80% of its revenue, and that number will increase dramatically beginning in Q3.
Source Fool.com
