Comcast Yields 5.6% and Trades at Just 8 Times Earnings. Is It a Trap?
Comcast Yields 5.6% and Trades at Just 8 Times Earnings. Is It a Trap?
Chris LangeSun, November 8, 2026 at 1:08 PM UTC
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jeepersmedia / Flickr (jeepersmedia / Flickr)Quick Read -
Comcast (CMCSA) pays out just 28% of free cash flow in dividends, leaving a wide cushion despite a 5.58% yield and shares down 43% over five years.
Charter (CHTR) lost 233,000 internet customers and pays no dividend, while Disney (DIS) trades near 16 times earnings, making Comcast's discount look wider.
Comcast lost 144,000 broadband customers in Q3 as fixed wireless takes share, yet wireless service revenue rose 15% and Peacock turned profitable.
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Comcast (NASDAQ:CMCSA) pays a 5.58% dividend yield and trades at roughly 8 times earnings. That is a high yield and a low multiple. The market has priced it this way for a while: shares are down 9.02% year-to-date and 43.03% over five years.
CMCSA Price Target — 24/7 Wall St.What a Value Trap Actually Costs You
A value trap is a stock that looks cheap because the business behind it is shrinking, so the price keeps slipping, earnings decline, and the dividend that drew you in eventually gets cut. Retirees feel this most. They lose both income and principal (we listed seven warning signs that a big yield is about to be cut in a free report).
Dividend Coverage Leaves Plenty of Cushion
In Q3, Comcast generated $4.211B in free cash flow and paid $1.2B in dividends. That works out to about 28% of free cash flow. The $1.32 annual dividend uses about 35% of the past four quarters of adjusted EPS. The quarterly payout has risen from $0.1575 in 2017 to $0.33. It has stayed flat through 2026, though, and the next payment is also $0.33.
CMCSA Earnings Explorer — 24/7 Wall St.
CFO Jason Armstrong said Q3 cash flow gained from "favorable timing impacts" that should reverse in the fourth quarter. In that quarter, Comcast also expects a transformation charge of over $1 billion.
Broadband Losses Fuel the Trap Case
Comcast lost 144,000 domestic broadband customers in Q3, and broadband revenue fell 4.7%. Video shed 274,000 customers. President Mike Cavanagh was direct about the pressure:
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"Fixed wireless remains aggressive and continues to take share."
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Steve Croney, who leads Connectivity & Platforms, pushed back on fiber rivals' pricing:
"Gig pricing at $30 to $40, in some cases even less, is going to be really hard to sustain."
Buybacks are also suspended through the NBCUniversal and Sky separation, which removes a key way the company returns cash to shareholders.
Charter and Disney Put the Discount in Context
Charter Communications (NASDAQ:CHTR) has it worse. It lost 233,000 pro forma internet customers, posted GAAP EPS of -$20.50 after a $6,326 million franchise impairment, and carries $108.6 billion in debt principal. It pays no dividend. Walt Disney (NYSE:DIS) trades near 16 times earnings and pays a $1.50 annual dividend. Its Experiences revenue rose 10%, while Comcast's Theme Parks revenue fell 4.4%.
Growth Engines Most Investors Are Missing
Domestic wireless service revenue rose 14.7%. Peacock earned $261M in Adjusted EBITDA, up from a $217M loss a year earlier, and finished with 48M paid subscribers. Croney called mobile "a capital-light model that leverages our existing customer broadband base." CEO Brian Roberts said the separation is on track:
"We generated $4.2 billion in free cash flow and are making meaningful progress on the separation of NBCUniversal and Sky."
Adjusted EPS of $1.07 exceeded the $0.98 consensus, the company's latest in a long run of earnings beats.
CMCSA Analyst Ratings — 24/7 Wall St.Verdict: Cheap Shares With a Frozen Raise
Comcast screens as cheap on yield and earnings multiple for income-focused researchers. The dividend uses well under half of earnings and free cash flow, and the business has growth drivers that can offset the broadband losses. The main warning sign is a payout that has stopped growing, along with buybacks on hold. Over the next few quarters, watch Q4 free cash flow after the timing reversal, broadband net losses, and the separation timeline. Management is aiming for mid-next year.
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Source: “AOL Money”
