Shaw Communications Inc

On my other blog I have uploaded the applicable spreadsheets. See my first spreadsheet on my site at planning.htm, my second spreadsheet at planning2.htm, and my third spreadsheet at planning3.htm.

I do not own this stock of Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR). They on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). I have followed this company for some time.

The dividend growth for the past 5 and 10 years looks very good at 15% and 44% per year. However, the dividend yield were extremely low (under 0.5%) until 2003. After that there were some very big increases (like 220% in 2004) until the dividend yield was in the 4% range.

The current dividend is 4.34% and the last increase was for 5.2%. The last few dividend increases were in the 4 to 5% range and this is probably what you should expect going forward. This would mean that on shares purchased today, you might expect to receive a dividend yield of 7% and 9% after 10 and 15 years on the cost of share purchased today.

The Dividend Payout Ratios are good with the 5 year median DPR for earnings at 66% and the DPR for cash flow at 27%. The DPR for the last financial year ending August 2012 was 59% for earnings and 32% for cash flow.

The total return over the past 10 years is very good, but quite lousy over the past 5 years. The 5 and 10 year total returns to the end of 2012 were 2.93% and 14.14%. The portion of the total return attributable to dividends was 3.62% and 3.25% respectively. Over the past 5 years there was a capital loss of 0.69% and over the past 10 years there was a capital gain of 10.90%. Dividends comprised of all of the gain over the past 5 years and were 22.97% of the total return over the past 10 years.

The number of outstanding shares has increased due to stock options, DRIPs, and share issues for acquisitions. They have also done share buy backs. Over the past 5 years outstanding shares have increased by 0.6% per year and over the past 10 years they have decreased by 0.4% per year.

Revenues have grown nicely over the past 5 and 10 years, with revenue going at 12.5% and 10% per year over the past 5 and 10 years. Revenue per share has increased by 11.9% and 10.6% per year over the past 5 and 10 years.

The 5 year growth rate in earnings is quite good at 12.6% per year. Because this company had negative earnings from 2001 to 2003, there are no 10 year growth figures. However, over the past 12 years earnings have grown at the rate of 16% per year.

Over the past 5 and 10 years, cash flow per share has grown at the rate of 4% and 15% per year. Book Value per Share has grown at the rate of 11% over the past 5 years. However, the BV growth over the past 10 years is the worse growth for this company and that growth is 2.7% per year.

The Return on Equity for the financial year ending August 2012 was at 22%. The 5 year median ROE is 21.4%. These are very good rates. The ROE on comprehensive income is close with the ROE for 2012 at 20.1% and the 5 year ROE at 20.9%. The ROE on net income in the last 12 months to the end of November 2012 was at 22%. This is also very good.

The weak area for this company is for the Liquidity Ratio. This ratio is often under 1.00 which means that current assets cannot cover current liabilities. The cash flow after dividends can move this value over 1.00, but not as high as I would like (which would be at 1.50). However, if you exclude the current portion of long term debt rates are better.

The Liquidity Ratio for the financial period ending in November 2012 is 0.49. With cash flow less dividends it becomes 1.26. If you take out the current portion of the long term debt the Liquidity Ratio is 0.64. If you exclude the current portion of the long term debt and take in cash flow less dividends, then the liquidity ratio gets to a more desirable 1.65. The company expects to have sufficient cash flow and borrowing capacity to finance their debt.

The Debt Ratio is fine at 1.51. The current Leverage and Debt/Equity Ratios are a little high, but fine at 3.43 and 2.27. They are basically in line with their industry.

The company is in a competitive business, but has managed to make money for their shareholders over the long term. The good dividend that they can afford would tend to limit the downside risk. This is normal for dividend paying companies which, while they may not rise as quickly as the market, they also do not fall as quickly as the market. Dividends tend to moderate stock price declines and limit downside risks.

Shaw Communications Inc. is a diversified communications company whose core business is providing broadband cable television, Internet, digital phone and satellite direct-to-home services. Industry: Communications & Media (Cable). SJR.B shares are non-voting and the SJR shares are voting shares. Its web site is here Shaw Communications. See my spreadsheet at sjr.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.