GCI Stock: Don’t Ignore This 7.9% High Dividend Yield
GCI is Offering a High Dividend Yield of 7.9%
Gannett Co Inc (NYSE:GCI) is paying a dividend yield of 7.9%. But even with such a high yield, is GCI stock worth an investment?
A media company, Gannett publishes news, both physically and digitally. More than 110-million people in over 120 countries around the world are considered regular readers of one of the company’s publications, the most popular and powerful being USA Today. Needless to say, a large readership base is good for the top and bottom lines of the balance sheet.
Now let’s take a more detailed look into GCI stock and determine if an investment would be appropriate.
Revenue Pattern and Outlook
Gannett’s quarterly revenue is reported to be very steady and growing, as investors hope for and expect. For instance, total second-quarter 2016 revenue was equal to $754.5 million; in the same quarter a year later, that number grew to $783.6 million. (Source: “Gannett Co. Inc.,” MarketWatch, last accessed September 21, 2017.)
The growth is attributed the digital side of the business, which has been forming new partnerships and using more proprietary data software to respond to customers’ needs. Also, local and national advertisers continue to use Gannett’s platforms because of its large customer base and the economic value offered. As a result, the company’s publishing and advertising divisions have enjoyed double-digit growth. (Source: “Gannett Reports Second Quarter 2017 Results of Operations,” Gannett Co Inc, August 3, 2017.)
Looking forward, the company expects the total revenue for fiscal year 2017 to top 2016 and continue the growth trend for the same reasons noted above. But another reason not yet mentioned is the company’s recent acquisitions, including Journal Media Group, Inc., one of the longest-existing publishing companies in the Milwaukee area, and SweetIQ Analytics Corp., a marketing company engaged in e-marketing solutions.
Does GCI Have a Strong Balance Sheet?
The strength of a company’s balance sheet is based on two things. The first is the cash balance is comparison to the market cap. For Gannett, the current cash-to-market ratio is 12.5%. This gives the business a lot of room to acquire more companies or make a reinvestment into current assets.
The second is the debt-to-capital (D/C) ratio. It is quite common to find a company that is holding debt on its balance sheet, meaning it is important to understand how it is being used. This is determined using the D/C ratio. When the ratio is above 50%, it means that there is too much debt, while a ratio below 50% means debt is under control. GCI stock falls into the latter category with a ratio 0f 31%.
If the cash is not used for an acquisition or reinvestment of capital, it could possibility be used for a special dividend, a one-time payment in additional to the regular dividend. It could also be used to increase the dividend, which would serve as a more long-term method of rewarding investors. Besides the obvious higher investor profits, either use of funds would boost the return on investment, which is always a positive.
The Bottom Line on GCI Stock
Even though print media is how it started operations, the company has changed with the times. That is why it still has a large audience. The same could be said about the advertisers that want their companies to get exposure to Gannett’s large reader base.
GCI stock is a strong candidate for an investment. Be sure to research the company further, however, before committing to its high yield.