Comcast's High Yield Persists Amid Broadband Struggles and Strategic Shifts

What happened

Comcast recently distributed a $0.33 per share dividend in January 2026, extending its dividend growth streak to 18 consecutive years, which contributes to a tempting 4.45% yield. This payout occurs against a backdrop of sustained broadband subscriber losses over 10 quarters, driven by fiber and fixed wireless competition, as highlighted in the DeepValue report. The company's valuation remains depressed at ~5.5x P/E, reflecting market skepticism about broadband economics, yet robust free cash flow of $19.2B in 2025 supports ongoing capital returns. Management is aggressively implementing a pricing reset and convergence strategy, including free wireless lines, to defend share, but this has pressured Connectivity & Platforms EBITDA margins to 37.1% in Q4 2025. Meanwhile, growth engines like Peacock and theme parks show revenue increases but face high costs and capital intensity, making their contribution to offsetting broadband drag uncertain.

Implication

The 18-year dividend growth streak underscores management's confidence in cash generation, but it risks masking underlying structural pressures in broadband, where revenue stability relies on ARPU gains amid volume declines. Investors should closely monitor quarterly broadband ARPU and EBITDA margins, as failure to stabilize by late 2026 could jeopardize the $10–12B annual capital return program and force dividend cuts. Peacock's path to profitability and parks' ability to sustain elevated EBITDA levels are critical offsets, yet both require significant ongoing investment and face competitive and cyclical risks. With the stock priced for distress, the low valuation provides a margin of safety, but any deterioration in free cash flow or leverage above ~2.5x would erode this buffer and necessitate a thesis downgrade. Overall, while the yield is attractive, a disciplined approach demands waiting for concrete evidence of broadband margin recovery before increasing exposure.

Thesis delta

This dividend news reinforces the existing thesis that Comcast's capital returns are backed by strong cash flow, but it does not alter the core narrative of broadband stabilization as the key driver. Investors should maintain focus on the guided timeline for margin improvement in 2H 2026, as any delays or deeper price wars would shift the thesis towards the bear case. The thesis would materially weaken if broadband revenue declines exceed 3% YoY or Peacock losses fail to narrow significantly by year-end, signaling unsustainable returns.