Comcast's 4.45% Yield Looks Tempting: Should You Take the Bait?

Core Viewpoint - Comcast's dividend yield of 4.09% and 18 consecutive years of dividend growth position it favorably against competitors, despite challenges in the broadband sector [1][2]. Financial Performance - Comcast achieved a record free cash flow of $21.9 billion in 2025, a 41.3% increase year-over-year, providing a coverage ratio of 4.48x for its $4.9 billion dividend payout [1][2]. - The company returned only 55% of its free cash flow to shareholders, maintaining a substantial cushion for future investments and economic downturns [1]. Dividend Growth - The quarterly dividend increased from $0.1575 in 2017 to $0.33 in 2026, reflecting a 109% increase over nine years, or approximately 8.5% compounded annually [1]. - The most recent dividend increase of 6.5% occurred in Q2 2025, with expectations for further increases in 2026 [1]. Competitive Position - Comcast's dividend yield of 4.09% and payout ratio of 24.49% contrast sharply with AT&T's frozen dividend and Charter's lack of a dividend program [1]. - AT&T has a similar yield but a higher payout ratio and a history of dividend cuts, while Charter focuses on debt reduction and share buybacks [1]. Growth Drivers - Domestic wireless revenue surged 18% in 2025, adding 1.5 million net lines, indicating significant growth potential [2]. - Peacock streaming revenue grew 23% to $1.6 billion in Q4, with expectations for further improvement in 2026 [2]. - Theme parks revenue increased by 21.9% to $2.89 billion, with EBITDA surpassing $1 billion for the first time [2]. Balance Sheet Strength - Comcast ended 2025 with a net leverage of 2.3x, indicating a strong financial position within investment-grade territory [2]. - The spinoff of cable networks into Versant Media was structured as a dividend distribution, maintaining the dividend growth streak while removing lower-growth assets [2]. Valuation Insights - Comcast shares trade at a trailing P/E ratio of 6x, approximately 20% below their five-year high, suggesting limited downside risk [2]. - The combination of a 4% yield, conservative payout ratio, and depressed valuation creates an attractive risk profile for dividend-focused investors [2].