Saturday, 29 June 2013

A Look at Rogers Communications


I recently purchased 135 shares of Rogers Communications (RCI-B.TSX) @ an average price of $43.76 including 2 commissions. My dividend yield is 3.98%.

Below is my analysis.

Average Dividend Yield Analysis*

RCI.B
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2003
$8.51
$4.18


$0.0250

$0.03
0.60%
0.29%
2004
$13.22
$8.25
$0.0250

$0.0250

$0.05
0.61%
0.38%
2005
$21.25
$12.19
$0.0250

$0.0250

$0.05
0.41%
0.24%
2006
$31.05
$18.31
$0.0375

$0.0375

$0.08
0.41%
0.24%
2007
$54.28
$29.68
$0.0400
$0.0400
$0.1250
$0.1250
$0.33
1.11%
0.61%
2008
$46.40
$22.61
$0.1250
$0.250
$0.250
$0.250
$0.88
3.87%
1.89%
2009
$37.50
$25.40
$0.250
$0.290
$0.290
$0.290
$1.12
4.41%
2.99%
2010
$41.64
$30.64
$0.290
$0.32
$0.32
$0.32
$1.25
4.08%
3.00%
2011
$39.33
$33.29
$0.320
$0.355
$0.355
$0.355
$1.39
4.16%
3.52%
2012
$45.84
$34.75
$0.355
$0.395
$0.395
$0.395
$1.54
4.43%
3.36%
2013


$0.395
$0.435
$0.435
$0.435
$1.70


2014


$0.435
$0.435
$0.435
$0.435
$1.74


Stock prices are per calendar year
5y ave
4.19%
2.95%
Dividends are recorded in the quarter they were paid
3y ave
4.22%
3.29%







5y
$41.53
$58.96







3y
$41.19
$52.82






Super Cheap
$39.26


The table shows the 3 year average dividend yield to be 4.22% ((4.08% + 4.16% + 4.43%)/3). I use the numbers in the “High Yield” column for obvious reasons.

Using the current annual dividend of $1.74, one would have to pay $41.19 for a 4.22% dividend yield.

Buying the stock at its low in 2012 would have earned you an initial yield of 4.43%. Using the current annual dividend, that corresponds to a stock price of $39.26 today (see “super cheap” price in the table above).

Graham Price

RCI.B’s 2010, 2011 and 2012 EPS were $2.65, $2.93 and $3.34. 3Y Ave EPS = $2.97.
RCI.B’s BV is $7.70.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $22.70

Cyclically Adjusted Price to Earnings Ratio

RCI.B’s 7Y Ave EPS = $2.29
CAPE = Stock Price / 7Y Ave EPS = $41.20 / $2.29 = 18
A CAPE below 20 is good.

Conclusion

ADY and CAPE indicate that Rogers Communications is attractively valued. Rogers is down 22% from its high of $52.75. The recent price drop is due to interest rate fears combined with Verizon’s possible entry into Canada.


*My method is not perfect as the stocks low price may have occurred before the annual dividend increase.

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