Nexstar Media (NXST) | the best dividend growth stock you've never heard of
11 straight years of 20%+ dividend hikes, a 4%+ yield and massive buybacks
Welcome to today’s feature on a standout dividend growth stock that has been flying under the radar despite its impressive performance. Meet our third focus stock. In this post, we delve into why Nexstar Media Group (NXST) tops all other U.S. equities in recent years based on a potent mix of dividend growth, yield, and share buybacks.
Key Stats for Nexstar Media Group (NXST)
Ticker symbol: NXST
Stock price: $167.55
Dividend yield: 4.0%
Years of dividend increases: 11
5-year CAGR: +30.3%
Market cap: $5.5 billion
Annual dividend payout: $222 million
Forward P/E for 2024: 6.65
Return on equity (2023): 13.7%
EBIT margin: 15%
Analyst Ratings
Nine analysts cover Nexstar Media Group, with the following ratings:
Buy: 8
Hold: 1
Sell: 0
Business Model and Free Cash Flow
Nexstar Media Group is a leading diversified media company, engaging in local and national news, sports, and entertainment content across its television and digital platforms. Nexstar boasts America's largest local broadcasting group, with 200 owned or partner stations in 116 U.S. markets, reaching 212 million people.
Nexstar’s business model is centered around generating free cash flow, which allows the company to pay dividends, repurchase shares, and reduce debt. The company’s disciplined approach to capital allocation aims to create long-term shareholder value. This strategy involves a balanced mix of dividend payments, debt reduction, share repurchases, and strategic investments in future growth.
Dividend Growth Record
Nexstar has a remarkable track record of annual dividend hikes:
2024: +25.2%
2023: +50.0%
2022: +28.6%
2021: +25.0%
2020: +24.2%
With 11 consecutive years of increasing dividends, Nexstar's smallest hike in this period was 20%. The company's 10-year compound annual growth rate (CAGR) for dividends is an impressive 27.4%, underscoring its consistent and robust dividend growth strategy.
Share Buybacks and Overall Performance
In addition to its dividend growth, Nexstar repurchased 10% of its outstanding shares in 2023, alongside a record 50% dividend hike. In 2024, the company continues this trend, having bought back more than 3% of its shares as of June 30. This year’s dividend hike of 25.2% is again one of the biggest in the United States.
Competitors and Risks
Nexstar operates in a competitive industry, facing competition from other local and national media companies. Some of its key competitors include:
Sinclair Broadcast Group (SBGI)
Gray Television (GTN)
TEGNA Inc. (TGNA)
Comcast Corporation (CMCSA)
Moat and Strategic Positioning
Nexstar Media Group's moat includes its extensive network of local television stations and its strong digital presence. This extensive reach and its ability to generate engaging local content provide Nexstar with a competitive advantage. However, the company faces risks such as changes in advertising revenue, regulatory changes, and evolving consumer preferences towards digital media over traditional broadcasting.
Nexstar Media Group continues to focus on strategic investments and capital allocation to maintain its position and grow its shareholder value.
Please let us know in the comments below if you have an opinion about Nexstar Media Group; are you a customer, a shareholder or an employee? Please share your thought on the company with us!
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.