Time Warner

(TWX)

took another step away from its online past Friday, reinstating a dividend almost five years after canceling it in the AOL merger.

The New York media conglomerate will start paying out 5 cents on common stock starting in the third quarter. The dividend, which had been discussed previously by CEO Richard Parsons, is the company's first since December 2000, when a pre-merger Time Warner paid 4.5 cents

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Time Warner cited a strong balance sheet, robust free cash flow generation and "excellent growth prospects" in declaring the dividend.

At 20 cents a year the company is committing to a roughly $900 million annual outlay. The company has about $8 billion of cash on its balance sheet and generated $3.46 billion of net income after preferred dividends in the 12 months to March 31. The company's overall debt is about $22 billion.

"We'll continue to have the financial flexibility to invest in organic growth and high-return, high-growth strategic opportunities, as well as explore other ways to reward our investors," Time Warner said.

Time Warner's stock closed Thursday at $17.75. At that price the dividend yield is 1.1%.