December 13, 2018

Rogers Communications Inc (RCI/B)

 

Canadian telecom companies always look enticing to Canadian buyers looking to soak up a juicy dividend.  Rogers Communications (RCI/B) is Canada’s biggest wireless services provider.  When you combine that with the fact that it is also the biggest cable television provider you have the makings of a very powerful company indeed.  Its revenues break down as follows: 66% from wireless communications, 30% from cable, 3% from new media properties, and 1% from its business solutions division.  In the first quarter of 2011 Rogers raised its dividend 11% to 3.73.  This caps off a strong 5 year run that has seen the company grow its dividend from an initial .16 per share in 2006.

 

Rogers CommunicationUpcoming Opportunities and Dangers:

Rogers has provided its shareholders with a steady dividend, has a very solid balance sheet, and a decent P/E ratio.  There is no question that the biggest news in the telecom sector these days is increased international competition.  Will Rogers respond to the challenge by streamlining their operations and coming out stronger or will the competition eat into its market share and force the company to downsize and specialize in order to remain viable?

Because the telecom depends so heavily on the part of the industry (wireless communications) that is growing the fastest, some experts believe it is the best stock to buy when considering the four major Canadian players (BCE Inc. (BCE), Telus Corp (T), and Shaw Communications (SJR/B) being the main competitors).  Other experts argue that because wireless communications have quickly become the most competitive part of telecommunications, the downward price pressure will hurt Rogers (RCI/B) the most.  Recent news on the Canadian federal government allowing for increased foreign ownership of Canadian telecoms, and deregulation of wireless communications in general, mean that this competition could be a very real risk going forward for Rogers.  It is likely the biggest wildcard out of the four major telecoms.

In preparation for the upcoming battle for market share in the wireless sector Rogers has heavily invested in cutting-edge infrastructure to support faster networks.  The technology is known as Long Term Evolution (LTE), and has been cited as the solution for large scale video streaming and other dense downloading traffic.  Rogers Communications (RCI/B) is well ahead of its rivals (and obviously even further ahead of new companies wanting to get into the market) in the application of this new technology and the Globe and Mail recently quoted Rogers CEO Nadir Mohamed as saying, “We’re putting a stake in the ground – LTE is going to the gold standard going forward, that’s where the world is going.”  He went on to say that the LTE service will be availe in Toronto, Montreal, Vancouver, and Ottawa by the end of 2011, and in Canada’s 25 biggest markets by 2012.  They claim that the LTE network will be three to four times faster than existing high-speed mobile networks.  By comparison Telus has stated it will begin launching the service in 2012, and BCE has begin running test trials, but has not announced any long term plans.  Verizon and AT&T have begun deploying the technology already in the USA.

Investors should keep in mind that it Rogers Communications (RCI/B) is a mature company with little room for explosive growth, but it should give shareholders looking for steady dividend income exactly what they want.  They have a sustained a solid record of raising the dividend aggressively and that trend has continued this spring.  Personally, I would rather park my money somewhere else within the sector; however, the commitment Rogers has shown to protecting its place at the top of the wireless food chain and expanding into other areas does bode well for the future of the company.

 

Rogers RCI/B Canadian Dividend Stock Graph

TSE RCI/B

Rogers RCI/B Canadian Dividend Stock Metrics

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
RCI/BRogers Communications Inc35.823.9648.30.455636273.93565-18.44262

 

Trackbacks

  1. […] telecommunications companies (the others being Shaw Communications (SJR/B), Rogers Communications (RCI/B), and BCE Inc. (BCE).  After Canadian Banks, they are definitely part of the […]

  2. […] other 3 big dogs in the Canadian telecom game (Shaw Communications (SJR/B), Rogers Communications RCI/B), and Telus Corporation (T) they are the unquestioned overall leader in the industry and are very […]

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