When The Walt Disney Company (NYSE: DIS) debuted Frozen in late 2013, the company caught lightning in a bottle. The movie grossed $1.276 billion in worldwide box office, reestablished Disney animation as a force to be reckoned with, and the theme song became an anthem for a generation of girls.
They say that lightning never strikes twice. They were wrong.
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When Marvel Studios debuted Black Panther in February, Disney caught lightning in a bottle once again. Nearly seven weeks into its theatrical run, the movie has just passed Frozen on the all-time worldwide box office list, breaking into the top 10.
On the domestic front, the film became the fourth-biggest grosser of all time, behind only Star Wars: The Force Awakens, Avatar, and Titanic. It will probably sink Titanic this weekend to take the bronze.
The soundtrack, Black Panther the Album, spent three weeks at the top of the Billboard album chart -- the most for any soundtrack since Frozen -- and still sits at No. 3.
A boost to Disney's growing film business
Investors are clearly underestimating Disney's movie business, which has been on a roll for several years running as the only studio to exceed $5 billion in global box office for three consecutive years. The company also crossed $6 billion in worldwide ticket sales in both 2016 and 2017, the only studio to achieve this feat. This has led to solid operating results as Disney's studio entertainment division has quadrupled its operating income since 2011 and now accounts for 16% of Disney's profits, up from just 6% five years ago.
The House of Mouse could be in for another banner year.
Marvel has another blockbuster in Avengers: Infinity War, which is set to debut later this month. The film will unite all of Disney's Marvel superheroes onscreen together for the first time to face a common enemy. This massive team-up has resulted in record-setting advance ticket sales for the studios next installment.
There are a couple of other potential blockbusters due out this year as well. Solo: A Star Wars Story introduces viewers to younger versions of Hans Solo, Chewbacca, and Lando Calrissian. The Incredibles 2 picks up where the original animated classic left off, and brings the original director and cast together again. A live action take on Winnie the Pooh, Christopher Robin continues Disney's trend of reimaging popular classics.
The biggest wild card, however, is the Christmas release of Mary Poppins Returns. The film will feature Emily Blunt in the title role, and star Meryl Streep, Colin Firth and Angela Lansbury. The long-awaited sequel also features Lin-Manuel Miranda, who earned his star power by writing and starring in the Broadway smash Hamilton, but the award winning actor, lyricist, and playwright also co-wrote songs for Disney's Moana.
Worth the price of admission
There are a lot of moving parts to Disney as an investment. Concerns over cord-cutting, streaming competition, and subscriber losses at ESPN have kept the stock range-bound for much of the past three years. The pending acquisition of assets from Twenty-First Century Fox, its soon-to-debut streaming service ESPN Plus, and plans for a namesake over the top streaming offering late next year add greater levels of uncertainty.
These fears have led to a stock that is clearly a bargain right now, trading at just 14 times trailing-12-month earnings, a level not seen in over five years. Its dividend currently yields 1.67%, only slightly below the 1.85% of the S&P 500. The company is only paying out 22% of its profits in dividends, leaving lots of room for future increases. It's also worth noting that Disney has increased the dividend 27% over the last three years, with more likely to come.
Disney's studio business is providing a solid backdrop while the company works through other issues. This all adds up to a solid opportunity for investors.
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Danny Vena owns shares of Walt Disney and has the following options: long January 2019 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.