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ITV (LSE: ITV) is probably one of the oldest dividend shares in my portfolio, one I’ve been holding since the early days. It’s been through a lot of ups and downs in that time but it has always maintained a higher-than-average yield.
This year has been particularly challenging for the business, facing fierce competition from digital streaming services. As traditional broadcasting revenue slips, it’s been focusing on its ITV Studios division.
The cost pressures mean the share price has struggled to regain its pre-Covid highs. Subsequently, it hasn’t raised its full-year dividend in three years.
Could 2025 be the year ITV finally raises its final dividend? The company’s Q3 trading update, released today, may be able to give some hints.
Key figures from the Q3 update
One of ITV’s key financial metrics is total advertising revenue (TAR), as this largely drives profits. With the rise of digital streaming services like Netflix, traditional broadcasters like ITV have seen a steady decline in advertising revenue over the past decade.
Major sports tournaments are now a core source of traditional advertising revenue, and revenue from digital advertising is slowly growing.
Last year, the Men’s Euros competition drove higher-than-average TAR. But with no big sporting event this year, ITV’s TAR was down 5% year-on-year in Q3.
Fortunately, ITV Studios and digital advertising helped boost total group revenue by 2%. Digital revenues grew around 13%, with streaming hours up 14% to 1.6bn, exhibiting the growing popularity of its ITVX streaming service.
Liquidity remains strong, with £352m in cash and £1bn in undrawn facilities, leaving net debt at £508m.
Forging ahead
Considering a shaky economic outlook ahead of the Autumn Budget, that’s not a bad performance. However, the ongoing effect on advertising demand means Q4 revenue is expected to be lower than last year.
That could have a real impact on full-year results and potentially hurt the share price.
But the broadcaster is pushing ahead despite the worries. It has identified £35m in temporary cost savings in Media & Entertainment (M&E) to supplement reduced advertising demand.
ITV Chief Executive Carolyn McCall reiterated the company’s earlier expectations to outperform the broadcast advertising market in Q4. “We have a strong programme slate for Q4 and into 2026, including the men’s 2026 Football World Cup,” she said.
Looking ahead, the group expects Studios to maintain average annual organic revenue growth of about 5%, with up to a 15% margin. By contrast, M&E is forecast to see TAR fall 9% year on year in Q4 and 6% for the full year.
What this means for investors
With the shares sliding, ITV’s dividend yield has risen to 7.3% over the past few months. That makes it increasingly attractive to income investors — but only if it’s sustainable.
With earnings down, its payout ratio is a bit high, but cash coverage remains good. As such, I wouldn’t say there’s any risk of a dividend cut in the immediate future.
But the long-term outlook remains questionable. For new investors considering the stock, I’d wait until the full-year results to see if advertising revenues improve.
Yet for existing shareholders like myself, I believe it’s still a decent dividend share that’s worth holding — for now.
