Shares of Walt Disney (NYSE: DIS) experienced a significant surge on Thursday following the company's quarterly report and transformation plans. With optimistic guidance, strong earnings growth, and the highly anticipated launch of ESPN's flagship streaming service in fall 2025, Disney's stock soared by 11% on the day. However, amidst all the positive news, one of the most exciting announcements may have been overlooked: Disney's announcement of an impressive 50% increase in its dividend payout.

In a move that reinforces Disney's confidence in its transformation into a formidable "earnings compounder," the company declared a semi-annual dividend of $0.45 per share, payable on July 25. This represents a 50% increase compared to its earlier dividend payment this year.

The decision to boost the dividend payout stems from Disney's efforts to regain the trust of dividend investors. In 2020, the company temporarily suspended dividend payments due to the adverse effects of the COVID-19 pandemic, which led to lower theme park sales and costly launches of new streaming services. However, Disney reinstated its semi-annual dividend in 2023, with the first payment going to shareholders in January of this year.

With the new semi-annual dividend, Disney's total annualized payments now amount to $0.90 per share. Presently, the dividend yield stands at approximately 0.8%, based on the current share price.

This substantial dividend increase is backed by Disney's improving financials. In the first quarter of fiscal 2024, Disney reported adjusted earnings per share of $1.22, a significant increase from $0.99 in the same quarter the previous year. Management also anticipates a full-year fiscal 2024 earnings per share growth of at least 20% to approximately $4.60.

During the company's earnings call, Disney CEO Bob Iger referred to this as a "new era" for the company, emphasizing its transition into a strong cash generator and earnings compounder starting in fiscal 2024. With projected continued growth in earnings and free cash flow, Iger believes Disney has a substantial opportunity to enhance its shareholder returns over time.

In addition to the dividend increase, Disney's board also authorized $3 billion for share repurchases during fiscal 2024. This move signals management's confidence in the company's improving financials and long-term performance potential. The share repurchase program, which represents about 1.5% of Disney's current market cap, is the first of its kind since 2018.

Investors have been keeping a close eye on Disney's performance, and as the company demonstrates its commitment to shareholder value through dividend raises and share repurchases, it becomes an appealing investment opportunity. However, it's important for potential investors to conduct thorough research and consider all factors before making any investment decisions.

While Disney's shares saw a remarkable boost following the announcement, it's crucial to note that investment advice provided by The Motley Fool suggests considering other potential stocks with higher return potential. Their Stock Advisor analyst team has recently identified ten promising stocks that could yield significant returns in the coming years.

Ultimately, Disney's dividend increase serves as a testament to the company's confidence in its transformation and ability to generate strong financial results. As the company progresses on its path to becoming an "earnings compounder," investors will eagerly monitor Disney's future endeavors and their impact on shareholder value.