Sirius XM Hikes Quarterly Dividend by 50%

Sirius XM Holdings, Inc. (SIRI), a provider of satellite radio and online radio services, announced that its Board has increased the quarterly cash common dividend by 50% to $0.0219 per share.

The upward revision in the dividend lifts the annualized dividend to $0.0876 per share with an annual dividend yield of 1.5%. The quarterly dividend is payable on November 29 to shareholders of record on November 5. (See Insiders’ Hot Stocks on TipRanks)

Commenting on the announcement, Sean Sullivan, CFO said, “The substantial 50% increase in our regular quarterly dividend reflects our continued confidence in SiriusXM’s ability to generate significant free cash flow in the coming years.  This increase is aimed at bringing our dividend yield more in-line with the broader market and sector comparables.”

The company also noted its intent to make strategic acquisitions as and when favorable opportunities arise, and to continue to reward shareholders with dividends and share repurchases by maintaining its financial flexibility through cash flow generation and managing leverage.

Recently, SIRI announced a $2 billion increase to its existing share buyback program, aggregating the total authorization to $18 billion.

Yesterday, Barrington analyst James Goss reiterated a Buy rating on the stock with a price target of $8, implying 32.5% upside potential to current levels.

Goss updated the model to better reflect the challenges in auto sales and the impact on net adds, which could create challenges for subscriber growth in Q4. Additionally, the analyst is encouraged by SIRI’s initiatives to promote new offerings like the out-of-car listening and streaming-only subscription plans.

Goss said, “Sirius XM offers an excellent business model with generally solid organic revenue growth and cash generation, with more opportunities to reach consumers through Pandora… The company’s cash flow generation supports substantial return of capital through repurchases and dividends, and it appears conceivable that increased dividend levels could be considered as a greater component of the return of capital strategy.”

Overall, the stock has a Moderate Buy consensus rating based on 6 Buys and 3 Holds. The average Sirius XM price target of $7.74 implies 26.7% upside potential to current levels. Shares have gained 4.3% over the past year.  

Further, according to SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service globally, SIRI’s website recorded a 1% monthly increase year-over-year in visits in September. Markedly, year-to-date website growth came in at 6.7% year-over-year. (See Sirius XM’s website traffic on TipRanks)

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