Rogers Communications Inc. (RCI) recently decided to pay an increased quarterly cash dividend of 43.5 cents per share on its common stock. It also reflects a 1.9% increase in dividend as compared with the last payment made in Jun 2013.
The company will be paying the revised quarterly dividend to both class A and class B shareholders on Sep 13, 2013, to shareholders of record at the close of business on Oct 2, 2013.
Rogers has been paying dividends uninterruptedly for the last 10 years. The current dividend yield is 4.2% with a dividend payout ratio of 0.46.
At the end of the second quarter of fiscal 2012, Rogers had $840 of cash and cash equivalents, while it generated $1,018.6 million of cash from operations. The excess cash available with the company will be utilized to repurchase shares or to pay dividends to its shareholders.
Shaw Communications Inc. (SJR), TELUS Corporation (TU) and BCE, Inc. (BCE), belonging to the same industry, paid quarterly dividends of 26 cents, 65 cents and 57 cents with dividend yields of 3.9%, 4.4% and 5.6%, respectively. Hence, the dividend yield of Rogers is just above Shaw Communications.
Apart from raising shareholders’ value by through increased dividends, Rogers also issued a share buyback plan of $500 million in fiscal 2013. In 2012, the bought shares worth $350 million.
We believe that such increased dividend payment coupled with such an aggressive stock buyback plan may impact Rogers’ cash flow going forward, thereby expanding its current debt-to-capitalization ratio of 0.33.
Moreover, Rogers’ plan to fully deploy 4G LTE across its footprints may further impact its cash position.
Currently, Rogers Communications has a short-term Zacks Rank #3 (Hold).
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