Even if theme parks aren’t your thing, there’s a good chance some of your money flows into The Walt Disney Company’s pockets: The behemoth owns ESPN, ABC and Marvel Studios, among other entertainment brands. Disney’s acquisition of 21st Century Fox is expected to close in 2019.
Given the company’s broad reach and cult following, it’s no surprise that Disney stock is currently beating the market, up roughly 5% year-to-date.
If that positive outlook makes your Mickey Mouse ears perk up, here’s our four-step guide for how to buy Disney stock.
1. Research Disney, the company
It would be dopey to buy Disney without first doing some homework.
Although you might be well-versed in all the Disney characters, theme parks and brands, you’re probably less familiar with the bones of the company: its management, revenue, net income and earnings. With a company like Disney, you also want to be familiar with where revenue is coming from, or which divisions drive the biggest profits.
Then look at the industry in which Disney operates, as well as the company’s competition. What challenges are ahead for the entertainment industry, and how is Disney positioned to weather — or not weather — them? Has Disney reacted well to current industry trends, such as consumers ditching cable TV for streaming services?
If you’re struggling to figure out how to answer these and other questions, our guide to how to research a stock will help.
2. Decide how much Disney stock to buy
You’ve looked at Disney from every angle. It’s a blue-chip stock with a solid history. But there are still risks in buying its shares.
Individual stocks are always riskier investments than diversified options like index mutual funds or exchange-traded funds. To build a diversified portfolio out of individual stocks, you’ll need to research 20, 30, maybe 40 companies. That takes a lot of work.
Index funds and ETFs do that work for you, by tracking a market index and allowing you to hold stock in hundreds of different companies within one fund. Unlike with an individual stock, when one company in an index fund goes belly up, you don’t lose your full investment. Over the long term, the other companies in the fund pick up the slack.
That’s not to say you shouldn’t buy Disney stock, but it is a gentle nag to follow this rule of thumb when you do: Limit individual stocks to 10% of your overall portfolio. The rest of your investable assets should be devoted to low-cost index funds and ETFs.
The other rule we’d suggest following when deciding how much to invest in Disney stock? Invest long-term money only. That means money you won’t need in at least the next five years. That protects you against short-term market volatility and gives your money time to grow.
3. Open a brokerage account
Some companies, including Disney, offer a direct purchase investment plan that allows you to purchase shares of the stock directly through the company itself.
You can easily open a brokerage account with no minimum investment and no initiation or account opening fee.
These direct stock purchase plans typically require minimum investments and charge enrollment fees. In the case of Disney, the minimum investment is $175 — more than the current cost of a single share of Disney stock — or a commitment to invest $50 a month as a recurring electronic transfer into the plan. There is also a $20 enrollment fee, and a $1 fee per additional investment.
That’s why we generally recommend purchasing stock through a brokerage account instead. A brokerage account is an investment account — if this type of account is new to you, check out our guide to brokerage accounts. Many brokerage accounts require no minimum investment, and they typically don’t charge initiation or account opening fees.
Unless you opt for a free-trading platform, you will pay a commission to buy or sell stock within a brokerage account, but that commission can be as low as $5. A brokerage account also gives you access to other investments, like the aforementioned index funds and ETFs, as well as stock of other companies.
The process of opening a brokerage account account is simple once you’ve chosen the best broker for you. Our list of the best online brokers can help with that.
4. Buy the Disney stock
The time has come: You have a budget, a brokerage account and you’re ready to make your purchase. To do that, you’ll use your broker’s online trading platform and fill out an order ticket to buy Disney stock.
Start by searching for Disney’s ticker symbol — typically a shortened version of a company’s name — on your broker’s website. Disney’s ticker symbol is DIS. That will bring up the current price per share, alongside a buy button. Click that button and the order ticket will pop up.
You’ll be prompted to make a few decisions as you fill out that order ticket. You’ll have to tell your broker how many shares of Disney you want to buy and how to process your order by selecting an order type. There will be a list of order types, but generally, you can choose between these two:
- A market order is best if you want your order to process quickly. It tells the broker to put your order through as soon as possible, prioritizing speed over price. That means the price you pay might vary a bit from the price per share you saw when you started placing your order.
- A limit order is best if you’re most concerned about the price per share. It tells the broker to place your order for Disney only if the stock is priced at or below a level you set. For example, if you only want to buy Disney if the share price is $113 or less, you will put that price into the order ticket and select a limit order. It’s possible your order won’t execute if that price is not available.
If you need more guidance for placing your order, see our full guide to how to buy stocks.
Once your order goes through, you’re officially a Disney shareholder. You’ll want to keep an eye on company news and Disney’s stock price going forward, but remember this is a long-term investment, and stock prices have a tendency to ebb and flow. The most important thing is that Disney maintains an upward trajectory over the long haul.