Is SiriusXM Holdings Stock an Obvious Buy Right Now?

Key Points

• SiriusXM is an attractively valued stock with a high dividend yield.

• Business conditions could make it an uncertain choice for specific types of investors.

• 10 stocks we like better than Sirius XM ›

One stock that may look like an obvious buy at first glance is SiriusXM Holdings (NASDAQ: SIRI). On the surface, it is the sole company granted commercial satellite broadcast rights in the U.S. Moreover, it trades at a low valuation and offers a generous dividend, a likely reason for Warren Buffett's Berkshire Hathaway to hold a 36% stake in the company.

Nevertheless, the stock fell in value over the last year. Knowing that, are there concerns with SiriusXM that should keep investors away, or is this an excellent holding that investors have overlooked?

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Understanding the draw of SiriusXM stock

Initially, one can see why Buffett and his team have taken a considerable interest in SiriusXM. Its $1.08 in annual payouts gives its shareholders a dividend yield of 4.5%, far above the S&P 500 average yield of 1.2%.

Also, if one factors in the one-for-10 reverse stock split that came with the spinoff from Liberty Media, the payout has risen annually since 2017. Since the $405 million in free cash flow for the first half of 2025 was far higher than the $183 million in dividends paid during the period, it appears to offer its shareholders a rising, sustainable payout.

Additionally, as mentioned before, SiriusXM controls satellite radio in the U.S. Thus, it gives its listeners nationwide coverage and exclusive content from stars such as Conan O'Brien and Andy Cohen. Podcasts like SmartLess are also broadcast on the platform, helping to take its subscriber base to around 33 million.

Impairment costs in 2024 left it without a P/E ratio. Still, its forward P/E ratio, which excludes such one-time charges, is just under 9. This arguably makes it the kind of bargain that would draw investors like Buffett.

Why the SiriusXM value proposition may not be so obvious

Nevertheless, investors need to keep factors in mind that could undermine the company's value proposition.

The first is involves whether SiriusXM is a monopoly. While it controls satellite-based radio content, listeners can get around that limitation through the country's 5G coverage. Thus, those not subscribed to SiriusXM can still listen to content that providers broadcast everywhere.

That factor may explain its stagnant subscriber growth. Its 33 million subscriber base grew by only 34,000 over the last year and fell by 68,000 from the previous quarter. That lack of increase is likely to put off growth investors.

Also, since subscriber revenue dropped slightly, the company's overall revenue for the first half of 2025 was $4.2 billion, a 3% decline from year-ago levels. That drop affected its financials across the board, meaning that its $409 million in net income during that timeframe fell from $595 million in the first two quarters of 2024.

Such a performance may help explain the stock's tepid performance. It also implies that at least some investors may not perceive SiriusXM as an obvious choice.

Is SiriusXM stock an obvious buy right now?

Considering its challenges, SiriusXM stock is not an obvious buy.

Admittedly, the low forward P/E ratio and the high-yielding, rising dividend make it a likely draw for income-oriented investors. While it might be presumptuous to label it an obvious choice, one can see why value and dividend investors like this stock.

Still, SiriusXM is an unlikely option for growth investors. Technology has made its control of satellite radio less meaningful, and struggles with subscriber growth appear to have led to declines in its financials. That leaves investors with no apparent reasons to bid its stock price higher despite an attractive valuation.

Ultimately, SiriusXM can be a suitable choice for income investors, and it has drawn interest from notable value investors, such as Warren Buffett. However, since the stock warrants a closer look at its business and financials, no investor should treat it as an obvious choice.

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Will Healy has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.