Rapidly shriveling stock prices have produced a new misery index for the nation’s beleaguered newspaper industry: sky-high stock dividend yields. So high, some observers speculate, that some cash-strapped companies will soon have to cut dividends, putting even more pressure on their stock prices.
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Examples of the Newspaper Misery Index (the higher the yield the greater the company’s financial misery), from Google Finance over the holiday weekend:
GateHouse Media 32.3%
Lee Enterprises 23.31%
E.W. Scripps 19.11%
A.H. Belo 18.35%
McClatchy 13.16%
Gannett 8.16%
Media General 8.12%
New York Times 6.04%
Washington Post 1.46%
News Corp. .82%
Historically, yields on established newspaper company stocks have generally been in the 1% to 2% range.
One Wall Street commentator wrote an open letter last month to GateHouse CEO Michael Reed, saying it’s time to eliminate the company’s dividend. The current annual payout is 80 cents a share on a stock that closed last week at $2.47.
Gatehouse, which went public in 2006, built much of its strategy on a relatively high yield, but not 30%. Wesley Edens, the chairman and CEO of Fortress Investment Group, is also chairman of GateHouse.
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