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.
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.