TKO Group Holdings is doubling its dividend, the company announced Wednesday, as strong cash flow and future revenue provided by recent UFC and WWE U.S. media rights deals spurred the company to boost the cash provided to shareholders.
The increase means the next quarterly payment to owners of the company’s Class A shares will be $0.76 a share. That equals about $150 million in capital to be returned to shareholders, according to a TKO press release.
TKO recently inked a deal with Paramount Skydance that will pay the company about $1.1 billion a year for the next seven years to broadcast UFC events, while WWE agreed to a five-year deal with ESPN worth $1.6 billion. The two deals significantly help the parent company’s outlook.
At Tuesday’s closing share price of $185.35, the projected $3.04 dividend for the next four quarters gives TKO a dividend yield of 1.64%. The dividend yield of the S&P 500, by comparison, is 1.2%, the lowest mark since the dotcom bubble.
Generally, paying a dividend appeals to long-term investors, such as mutual funds. The payments encourage funds to hold shares and be opportunistic buyers on price declines, providing stability to a company’s share price over the long term. Fund giant Vanguard Group is one of TKO’s largest shareholders with about 8% of the company’s equity held across its funds, according to TKO’s latest proxy statement.
TKO also said it is seeking to increase the size of its existing credit facility by up to $1 billion.
