Sirius XM Holdings (NASDAQ: SIRI) had a rough 2024. The company's share price collapsed by more than 50%, wiping out roughly $8 billion in value. But it appears as if the correction has attracted some well-known investors. Warren Buffett's holding company, for instance, now owns $2.4 billion in shares, adding to its position as recently as December.
Sirius XM's share price weakness has pushed its dividend yield up to historic highs. Might this be why Buffett is adding to his position? How much exactly will the company pay out in dividends this year?
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »
Sirius XM is now a serious dividend stock
For most of its history, Sirius XM did not issue a dividend. This makes sense when you remember the company's history. In the late 1990s and early 2000s, Sirius XM was spending heavily to build out its distribution infrastructure, as well as marketing aggressively to new potential customers. From 2005 through 2010, meanwhile, the business struggled mightily. Many analysts were predicting that the company would soon go bankrupt. Instead, Sirius and XM -- the two largest domestic satellite radio providers -- merged in a deal that would see the combined company's financial prospects soar.
For a decade straight beginning in 2015, Sirius XM consistently posted positive profits and free cash flow. Despite a down year in 2024, the business still generated more than $900 million in free cash flow. The company used this excess cash in part to fund a $0.27 quarterly dividend, which cost approximately $360 million annually.
SIRI Dividend Yield data by YCharts.
Due to Sirius XM's collapsing share price, the stable dividend payout has forced the stock's dividend yield to soar. Right now, a $1,000 investment would generate nearly $48 in annual dividends. The company did post a surprise loss last quarter, but its free-cash-flow position remains solid. The company has also spent hundreds of millions of dollars recently on share buybacks. Pausing that program could free up even more cash to keep the nearly 5% dividend yield stable.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $369,816!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,191!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $527,206!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of January 21, 2025
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
