Updated 3/10/25
Graham Holdings Company (GHC) isn’t a household name in the dividend stock world, but it has a strong financial foundation and a long history of responsible capital management. Once known as The Washington Post Company, GHC has evolved into a diversified holding company with businesses spanning education, manufacturing, television broadcasting, healthcare, and more.
Its dividend yield may not immediately catch the eye, but for those who prioritize financial strength and a steady, long-term return, GHC presents an intriguing opportunity. Let’s take a closer look at how this company measures up from a dividend investor’s standpoint.
Key Dividend Metrics
📌 Dividend Yield: 0.77%
📌 Annual Dividend: $7.20 per share
📌 5-Year Average Yield: 1.06%
📌 Payout Ratio: 4.21%
📌 Dividend Growth: Slow but steady
📌 Ex-Dividend Date: April 17, 2025
📌 Dividend Payment Date: May 8, 2025
Dividend Overview
At first glance, GHC’s dividend yield of 0.77% might seem underwhelming, especially when compared to high-yield dividend stocks. But a deeper look reveals a company that prioritizes sustainability over sheer payout size. The company’s average yield over the past five years is slightly higher at 1.06%, which suggests that recent stock appreciation has compressed the yield.
The most striking aspect of GHC’s dividend is its ultra-low payout ratio of just 4.21%. This means the company is distributing only a tiny fraction of its earnings as dividends, leaving plenty of room for reinvestment in its business operations and future dividend increases.
GHC also generates strong cash flow, with $677 million in levered free cash flow over the past year. This solid cash position ensures that the dividend remains safe and sustainable, even in economic downturns.
Dividend Growth and Safety
Although GHC isn’t a high-growth dividend stock, it has a track record of increasing payouts over time. Here’s why its dividend is particularly secure:
✔ Extremely Low Payout Ratio – With just 4.21% of earnings going toward dividends, there’s virtually no risk of a cut, even if earnings take a temporary dip.
✔ Strong Cash Flow – The company brought in $406 million in operating cash flow over the past year, ensuring more than enough cash to sustain and potentially grow its dividend.
✔ Financial Strength – GHC’s balance sheet is one of the strongest among dividend payers, with over $1.12 billion in cash reserves.
✔ Conservative Management – The company has historically been careful with its capital allocation, favoring sustainable dividends over aggressive increases.
While investors looking for rapid dividend growth may be underwhelmed, those who prioritize stability and long-term sustainability will appreciate GHC’s approach.
Chart Analysis
Overall Trend
The chart for Graham Holdings Company (GHC) shows a strong uptrend over the past year. The stock has consistently moved higher, with some pullbacks along the way, but overall, the momentum has remained positive. The price has been trading above both the 50-day and 200-day moving averages, which is a bullish sign. The gap between these two moving averages has widened, indicating that the longer-term trend is still intact.
Moving Averages
The 50-day moving average is trending upward and remains well above the 200-day moving average, reinforcing the strength of the uptrend. This kind of separation between the two moving averages often suggests continued bullish sentiment, as short-term price movements remain above long-term trends. However, the stock recently pulled back slightly from its highs, hovering near its 50-day moving average. If the price fails to hold this level, a short-term correction could follow.
Volume Activity
Volume has remained fairly steady, with some notable spikes at certain points. A large volume surge in October stands out, indicating that institutional activity may have been involved. More recently, trading volume has remained moderate, suggesting a lack of extreme buying or selling pressure. If the stock experiences another surge in volume alongside an upward move, that would confirm continued strength in the trend.
Relative Strength Index (RSI)
The RSI indicator appears to be in the mid-range, meaning the stock isn’t currently overbought or oversold. This suggests there’s no immediate need for a strong correction, but at the same time, it doesn’t indicate an imminent breakout either. A move above 70 would suggest overbought conditions, while a drop below 30 would indicate oversold conditions.
Recent Price Action
Looking at the past five candles, the price has been consolidating near recent highs but has shown some selling pressure. A few of these candles have longer upper wicks, which suggests that while the stock is trying to push higher, sellers are stepping in at those levels. This could indicate resistance forming near the recent highs. The lower wicks on some of the candles show that buyers are still active, preventing a deeper pullback for now.
Key Support and Resistance Levels
The $900 level appears to be a key psychological support zone, as the stock has tested this area multiple times and bounced back. If this level fails to hold, the next strong support could be near the 50-day moving average, which has acted as a safety net for the stock in past pullbacks.
On the resistance side, the recent high near $990 could be an area where sellers start taking profits. If the stock manages to break through this level with strong volume, it could signal another leg higher.
Analyst Ratings
📈 Upgrades
📊 In November, StockNews.com elevated GHC from a hold to a buy rating. This shift was driven by the company’s solid financial performance, including a notable increase in operating revenues and a return to profitability in the third quarter. Such results often signal a company’s resilience and growth potential, prompting analysts to adopt a more optimistic outlook. Investors looking for a fundamentally strong business with steady revenue streams saw this upgrade as a sign of confidence.
📉 Downgrades
⚠️ On the other hand, some analysts have taken a more cautious stance. The consensus recommendation for GHC currently leans toward a sell rating, based on assessments from multiple analysts. This perspective may stem from concerns about the company’s future earnings growth or broader industry challenges. Slower expansion in certain business segments and potential macroeconomic headwinds have contributed to the cautious sentiment surrounding the stock.
🎯 Consensus Price Target
💰 The average analyst price target for GHC is $765.00, which suggests a potential downside from its current levels. This target reflects a more conservative outlook, possibly due to anticipated revenue fluctuations or concerns that the stock is trading above its intrinsic value. While some analysts believe the company’s fundamentals remain strong, the valuation is a key factor in these price projections.
🔍 These varied analyst perspectives highlight the importance of looking beyond ratings and understanding the underlying business fundamentals before making investment decisions.
Earnings Report Summary
Graham Holdings Company (GHC) wrapped up the year with solid financial results, showing both growth and some challenges across its various business segments. In the fourth quarter, the company pulled in $1.25 billion in revenue, up 7% from the previous year. For the full year, revenue hit $4.79 billion, an increase from $4.41 billion the year before. The most impressive number, however, was net income, which jumped to $724.63 million, a massive leap from $205.29 million the prior year. This surge suggests the company has been making the right strategic moves while benefiting from operational efficiencies.
The education segment, led by Kaplan International, had a strong quarter with a 16% revenue boost, particularly driven by growth in international markets. However, operating income took a slight hit due to increased incentive compensation and some higher development costs in its professional education business. The higher education division stayed steady in revenue but faced some pressure from rising expenses.
One of the biggest areas of weakness was the television broadcasting division, which saw revenue fall 19% compared to last year. The drop was largely due to lower political advertising revenue, which is common in non-election years. Operating income for the segment also took a 43% hit, showing how much political ads impact the bottom line.
The manufacturing division struggled a bit, with revenue down 14% in the fourth quarter. Some of this was due to lower wood prices and weaker demand at certain subsidiaries, though increased pricing in other areas helped cushion the blow. Dekko, which produces commercial office electrical products, saw lower demand as well, which contributed to the decline.
On a brighter note, healthcare had a great quarter, with revenue surging 34% thanks to strong growth in home health, hospice services, and a solid contribution from recent acquisitions. The automotive segment also performed well, helped by the acquisition of Toyota of Richmond, though Jeep dealership sales were softer.
The other businesses segment, which includes retail and specialty businesses, declined 7% due to weaker performance in media and retail. However, some specialty businesses showed strength, and the segment’s overall operating results improved because of fewer impairment charges compared to last year.
Overall, GHC had a strong year, navigating challenges while capitalizing on opportunities in key areas. With a mix of growing and declining segments, the company remains well-positioned for the long run, though certain industries, like television broadcasting, may continue to see some volatility.
Financial Health and Stability
Graham Holdings is backed by an incredibly strong balance sheet. Here’s why its financial health stands out:
✔ Massive Cash Reserves – GHC is sitting on $1.12 billion in cash, which amounts to $257.97 per share. This provides a significant cushion against volatility.
✔ Manageable Debt Levels – With total debt at $1.34 billion and a debt-to-equity ratio of 29.88%, the company maintains a healthy balance between debt and equity.
✔ Undervalued Book Value – The company’s book value per share stands at $982.54, suggesting the stock is trading close to its intrinsic worth.
✔ Strong Profitability – GHC maintains a profit margin of 15.13%, ensuring consistent earnings generation.
✔ High Return on Equity – At 17.12%, GHC’s ROE indicates that the company is efficiently using its equity to generate profits.
With a current ratio of 1.75, the company has more than enough assets to cover its short-term liabilities. Add to that its diversified portfolio of businesses, and it’s clear that GHC is built to withstand economic fluctuations.
Valuation and Stock Performance
For a company with such strong financials, GHC’s valuation looks quite compelling. The stock trades at a price-to-earnings (P/E) ratio of just 5.72, well below the market average. That suggests the market may be undervaluing GHC’s earnings power.
✔ Price-to-Book Ratio – At 0.95, the stock is trading near its book value, which could indicate a buying opportunity.
✔ Enterprise Value to EBITDA – A multiple of 2.83 signals that the stock is attractively valued compared to its earnings potential.
✔ Stock Performance – Over the past year, GHC has ranged between $683 and $993, with a current price of around $924.02. The 200-day moving average of $827.97 suggests an overall positive trend.
✔ Institutional Confidence – Major investors clearly see value here, as 81.27% of shares are held by institutions.
For long-term investors, this could be an opportunity to own a fundamentally strong company at an attractive valuation.
Risks and Considerations
Every stock comes with risks, and GHC is no exception. Here are some factors to consider:
⚠ Low Dividend Yield – At 0.77%, GHC doesn’t provide the kind of income that high-yield investors typically seek. The primary appeal here is stability, not high payouts.
⚠ Diversified Business Model – While diversification reduces risk, it also makes the company harder to analyze. GHC’s various segments include education, healthcare, manufacturing, and media, each with its own challenges.
⚠ Low Trading Volume – With an average daily volume of just 17,000 shares, liquidity could be an issue for large investors trying to enter or exit positions.
⚠ Economic Sensitivity – Some of GHC’s business segments, such as education and television broadcasting, could face headwinds during economic downturns.
While these risks are worth considering, they are largely offset by GHC’s financial strength and conservative management approach.
Final Thoughts
Graham Holdings isn’t the kind of stock that will excite investors chasing high yields, but for those who value stability and long-term financial strength, it offers plenty to like.
✔ Extremely low payout ratio ensures dividend safety
✔ Strong balance sheet with over $1.12 billion in cash reserves
✔ Undervalued stock with a P/E of 5.72 and a price-to-book ratio under 1
✔ Institutional investors hold more than 81% of shares, reflecting strong confidence
For investors looking to add a financially secure, long-term dividend payer to their portfolio, GHC is worth a closer look. While the immediate yield may be low, the company’s ability to consistently generate profits and maintain its dividend makes it a reliable option for patient investors.
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