Wednesday, 23 July 2014

A Look at Rogers Communications


I made a few small purchases of Rogers Communications (RCI.B-TSX) because I cannot find much in the way of bargains. I would consider adding more if the share price were to fall around $40.

Right now, I am considering initiating positions in UTX, GSK and MCD. Although not below fair value (IMO), their share price has recently dipped.

Below is my analysis of RCI.B.

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
$52.75
$40.18
$0.395
$0.435
$0.435
$0.435
$1.70
4.23%
3.22%
2014


$0.435
$0.4575
$0.4575
$0.4575
$1.81


2015


$0.4575
$0.4575
$0.4575
$0.4575
$1.83


Dividends are recorded in the quarter they were paid.
11y ave
2.57%
1.79%
Stock prices are per calendar year.
5y ave
4.26%
3.22%







3y ave
4.27%
3.37%







5y
$42.93
$56.86







3y
$42.81
$54.34






Super Cheap
$41.29



The table shows the 3 year average dividend yield to be 4.27% ((4.16% + 4.43% + 4.23%)/3). I use the numbers in the “High Yield” column for obvious reasons.

Using the current annual dividend of $1.83, one would have to pay $42.81 for a 4.27% 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 $41.29 today (see “super cheap” price in the table above).

Graham Price

RCI.B’s 2011, 2012 and 2013 EPS were $2.93, $3.34 and $. 3Y Ave EPS = $3.70.
RCI.B’s BV is $9.54.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $26.75

Cyclically Adjusted Price to Earnings Ratio

RCI.B’s 9Y Ave EPS = $2.53
CAPE = Stock Price / 9Y Ave EPS = $42.40 / $2.53 = 16.8
A CAPE below 20 is good.

Conclusion

ADY and CAPE indicate that Rogers Communications is attractively valued. If you are considering a position in RCI.B, click here to read an interesting article.


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

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