Disney to Pay Dividends on an Annual Basis

Walt Disney Co. said Tuesday that starting next year it will pay dividends to shareholders annually instead of each quarter.

Disney is the biggest company to adopt the practice and the first major entertainment company to do so. But the move is not unprecedented. Disney said that two other Fortune 500 companies, United Healthcare Corp. and Publix Supermarkets, do the same.

Disney said the reason for the switch is to reduce the administrative costs of mailing checks to its 1.7 million shareholders. More than most companies, Disney has a good chunk of its stock held by small individual shareholders.

The company said that a large number of quarterly dividends are paid to those who own 10 shares or less, often with checks whose amounts don’t add up to the cost of the postage.

Disney currently has 2 billion shares outstanding, and plans to pay the dividend each November.

Analyst Christopher Dixon of Paine Webber Inc. said that the move is understandable given the administrative costs Disney incurs in paying quarterly dividends to so many stockholders.

He said that as long as the dividend itself isn’t being cut, the company isn’t likely to take much heat from shareholders.

Geraldine Weiss, publisher of the Investment Quality Trends newsletter in La Jolla, said that because Disney’s yield is low and shareholders tend to buy the company for its growth potential, shareholders are unlikely to be upset and the company’s stock won’t be affected.

Disney currently pays a quarterly dividend of 5.25 cents a share.

Separately, Disney named Andrea Van de Kamp, chairman of Sotheby’s West Coast, to its board of directors.