Dj Charter Communications Stock Is A Disaster. The Answer Could Be A 10% Dividend. - Barrons.Com

Andrew Bary

Charter Communications is in a bind.

The company has a weak stock, one of the lowest price/earnings ratios in the S&P 500, ample free cash flow, and a mountain of debt.

What should it do? The company's answer has been to buy back lots of stock. But that approach so far has been a disaster.

An alternative, paying a big dividend, could be a better option. Charter, the No. 2 cable and broadband provider in the country behind Comcast, could pay a 10% dividend and still have plenty of free cash flow for either stock repurchases or repaying debt.

Doing so could boost the stock, which is down 40% this year at around $200, making it one of the worst performers in the S&P 500. The shares have fallen more than 75% from their peak of more than $800 in 2021. They are below where they stood a decade ago.

Media mogul John Malone, whose Liberty Broadband has effective control of Charter, has long been a champion of stock repurchases. But he suggested recently that Charter might emulate Verizon Communications and pay a sizable dividend.

Liberty Broadband owns about 25% of Charter stock and has a deal to be purchased by Charter. Charter also has agreed to buy cable and broadband provider Cox Communications. Both are expected to close in 2026.

Malone raised the issue at Liberty Media's Nov. 20 investor day and then in a CNBC interview.

"So I believe that they've got to rethink the return of capital at Comcast and at Charter...do they believe they got a business that can pay a sustainable dividend," Malone told CNBC. "And if they do, they may have to do like Verizon, which carries a higher valuation than the cable guys and pays out almost all of its free cash flow as a dividend."

Pivotal Research Group analyst Jeff Wlodarczak wrote after Charter's disappointing third-quarter earnings report in late October that management "should seriously consider initiating a sizable regular dividend." He said the dividend yield could be in the "low teens" with the remainder of the company's free cash flow earmarked for debt reduction.

Charter hasn't paid a dividend since its inception 15 years ago. Comcast, by contrast, pays a 5% dividend on its depressed shares.

Charter, which declined to comment, is expected to generate about $5 billion of free cash flow this year, or about $36 a share. That figure roughly equals its projected earnings.

With declining capital expenditures in the coming years, Charter has talked about potentially generating $9 billion in free cash flow annually, possibly in 2028.

Here's some simple math. If Charter paid a dividend of $20 a share, roughly half its free cash flow, its stock would yield 10%. Given that investors value dividends, the shares could trade higher.

Under the same 50% payout scenario, the dividend could rise to $30 a share in the coming years if management's outlook for free cash flow pans out.

Verizon stock, trading at around $40, has a nearly 7% yield. It pays out close to 60% of earnings.

Charter has the second-lowest price/earnings ratio in the S&P 500 index, trading for just five times projected 2026 earnings. Only the drug maker Viatris, at about 4.5 times, has a lower P/E ratio.

Part of the problem is that Charter is caught up in the battle between cable and telecom companies over the market for internet service. AT&T and Verizon Communications are rolling out broadband services using fiber. Another threat is so-called fixed-wireless, or low-cost internet services using wireless spectrum.

Investors fear the business is slowly eroding. Charter lost 1.5% of its broadband subscribers over the year ended in the third quarter. The potential for softer pricing is another concern.

Malone lamented the competitive landscape for internet service, telling CNBC that there is "way too much capex going in, competing for what is essentially a matured business."

Charter's total revenue fell 1% year over year in the third quarter to $13.7 billion. Adjusted earnings before interest, taxes, depreciation, and amortization came in at $5.6 billion, down by the same percentage.

Compounding the situation for Charter is its high leverage. It has about $95 billion of debt, about four times its annual Ebitda, with an equity market capitalization of less than $30 billion. Its leverage ratio is double that of Comcast.

Some Charter debt now yields close to 7%, reflecting concern among investors. That compares with a 5% yield on Comcast debt.

But the company's capital allocation strategy has been to use free cash flow mainly to buy back stock, rather than to pay down debt. Malone has long preferred buybacks over dividends as a tax-efficient way to return capital to shareholders.

The buyback strategy has been terrible for Charter. The company has repurchased $78 billion of stock since 2016 at an average price of $441, double the current share price, according to a presentation accompanying i ts third-quarter earnings release. The lack of a dividend has made things worse for investors, and some have slashed their holdings.

Berkshire Hathaway now owns a million shares, down from 5 million at the end of 2019. Like Charter, Verizon stock also is down over the past decade but Verizon holders at least have benefitted from an ample dividend.

Some analysts see hope for the stock.

Analyst Craig Moffett of MoffettNathanson Research, who noted after the earnings report that the company is "quietly going private" as it steps up the pace of stock repurchases, also wrote that the stock is valued at just a "2x P/E ratio on 2028" estimated earnings.

"Yes, you read that right," he said.

Charter boosted its repurchases in the third quarter to 7.6 million shares, or nearly 5% of the share count and the highest quarterly figure since 2022. Moffett remains bullish with a Buy rating.

Charter has one of the highest levels of short interest relative to its float in the S&P 500, indicating bearish sentiment. But if the narrative becomes more positive, there could be pressure on Charter shorts to cover.

Charter has proven to be a value trap, but it is worth a look from value investors. The valuation is at rock bottom, the franchise is still durable, and a big dividend could be on the way.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

PHILADELPHIA, PA / ACCESS Newswire / November 26, 2025 / Comcast today announced $2.5 million in total grant funding to Lead for America (LFA) and Partners for Rural Impact (PRI), two nonprofit organizations working to open doors to economic mobility and strengthen communities across the United States. The partnerships are part of Project UP, Comcast's $1 billion initiative to connect people to the internet, create digital opportunity, and build a future of unlimited possibilities.

Comcast funding will enable LFA's American Connection Corps (ACC) program and PRI to expand digital opportunities across rural communities in Arkansas, Maryland, Ohio, Oregon, Pennsylvania, Tennessee, Utah, Vermont, and West Virginia. Through these combined efforts, the organizations will place more than 24 ACC Members in local communities to serve as digital navigators, trusted community members trained to help people get online, use devices, and build digital skills.

$2.5M in total grant funding from Comcast to Lead for America (LFA) and Partners for Rural Impact (PRI)

"Access and skills are essential in today's digital economy," said Dalila Wilson Scott, EVP and Chief Impact & Inclusion Officer, Comcast Corporation and President, Comcast NBCUniversal Foundation. "When communities lack the resources and training to gain and develop digital skills, entire regions are held back."

By deepening the connection between the work of American Connection Corps to the communities served by Partners for Rural Impact, we are advancing our longstanding commitment to ensuring that opportunity reaches every part of America.

Dalila Wilson Scott

EVP and Chief Impact & Inclusion Officer, Comcast Corporation and President

Comcast NBCUniversal Foundation

"American Connection Corps Members are locally-sourced leaders and often serve as the bridge between technology and opportunity," said Taylor Stuckert, CEO, Lead for America. "By partnering with Comcast and PRI, we can launch more digital opportunity projects, spearhead crucial digital literacy initiatives and connect community members to new opportunities."

ACC, which focuses on placing service-minded leaders in their home communities to expand digital opportunity and advance economic mobility, will increase the number of digital navigators in rural communities.

PRI strengthens rural communities by advocating for investment, strengthening civic infrastructure, and increasing access to quality training programs across all stages of learning. In addition to employing more members of ACC in Maryland, Tennessee and Utah, PRI will also create a new, comprehensive digital portal for community leaders to access training materials, funding opportunities, data, and coaching--making vital resources available to all rural communities.

"Too often, rural communities are left out of conversations about opportunity and growth," said Dreama Gentry, CEO of Partners for Rural Impact. "Comcast recognizes that without the tools, digital skills, and services to connect to the internet, rural Americans can't fully participate in the digital economy. This investment allows PRI to meaningfully expand our work and provide training, jobs, and opportunity."

Currently, Xfinity's high-speed network reaches over 5.2 million rural households in 952 counties.

About Comcast

Comcast Corporation is a global media and technology company. From the connectivity and platforms we provide, to the content and experiences we create, our businesses reach hundreds of millions of customers, viewers, and guests worldwide. We deliver world-class broadband, wireless, and video through Xfinity, Comcast Business, and Sky; produce, distribute, and stream leading entertainment, sports, and news through brands including NBC, Telemundo, Universal, Peacock, and Sky; and bring incredible theme parks and attractions to life through Universal Destinations & Experiences. Visit www.comcastcorporation.com for more information.

View additional multimedia and more ESG storytelling from Comcast on 3blmedia.com.

Contact Info:

Spokesperson: Comcast

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Email: info@3blmedia.com

SOURCE: Comcast

View the original press release on ACCESS Newswire

By Katherine Hamilton

NBCUniversal pulled its networks from FuboTV after, according to the streaming platform, Fubo didn't agree to NBCUniversal's demands while the two negotiated a content-distribution agreement.

Fubo and NBCUniversal have been engaged in negotiations to renew the entertainment company's content agreement to distribute its networks. Fubo said it felt NBCUniversal's demands would hurt Fubo customers and that it didn't agree to them as a result.

NBCUniversal, which pulled its networks from Fubo on Nov. 21, said it offered Fubo the same terms as have been agreed to by hundreds of other distributors.

NBCUniversal is spinning off some of its cable networks into a new company called Versant on Jan. 1. Fubo said it had offered to distribute Versant channels for one year. NBCUniversal wanted Fubo to sign a multiyear deal, Fubo said.

Fubo also said NBCUniversal wants it to subsidize its Versant channels, and said it is discriminating against Fubo by allowing other streaming companies to integrate NBCUniversal's Peacock streaming service directly into their channel store, while not doing the same for Fubo.

Write to Katherine Hamilton at katherine.hamilton@wsj.com