Topping up a Position – Corus
Yesterday we were able to add some additional funds to our Tfsa account. With the additional cash from dividends sitting in the account we were now sitting at 1000 bucks. Time to Buy.
We decided to add to one of our very first positions. Corus Entertainment. I know a lot of readers be hating….. They didn’t raise their dividend this year… Cables dead… Their payout ratio is too high…
About Corus Entertainment
Corus Entertainment Inc. is a media and content company. The Company creates and delivers quality brands and content across platforms for audiences around the world. The Company’s portfolio of multimedia offerings encompasses 45 specialty television services, 39 radio stations, 15 conventional television stations, a global content business, digital assets, live events, children’s book publishing, animation software, technology and media services. Corus’ roster of premium brands includes Global Television, W Network, OWN: Oprah Winfrey Network Canada, HGTV Canada, Food Network Canada, HISTORY, Showcase, National Geographic Channel, Q107, CKNW, Fresh Radio, Disney Channel Canada, YTV and Nickelodeon Canada (Source RBC Direct Investing)
Content is king. Simply put. They own a tonne of radio stations and tv channels. Almost every time I’m listening to the radio I hear this is a Corus Entertainment company. Corus is a Media powerhouse in Canada. Look what Disney is doing by buying Fox, dominating the media space.
But Rob what about that dividend payout ratio, its too high! However if you look at the free cash flow in fiscal 2017 it totaled 292.66 Million and paid out 141.09 Million in dividends a 48.2% payout ratio of cash flow. Now this year they didn’t raise their dividend, obviously I would of preferred that. That massive deal with Shaw changes things and they need to pay that debt down. Long term its no big deal your still collecting a 10% yield if it doesn’t get cut!
Why Corus Entertainment?
The main reason for this purchase was to enable the stock to drip. I love me a good monthly drip. We added 93 stocks for a all in cost of 1098 dollars. This purchase will increase our forward dividends by $106.02. Yup you read that right! Its a massive increase. Do I worry they might cut the dividend? Yeah kinda of but I have held Corus for a year and a half now and have heard they might cut the dividend the whole time etc etc.
The yield on cost of this purchase was 9.73%. Which is really high, but it has been higher in the past 13 years. Ranging from a high of 12.32% to a low of 1.71%. Its dividend growth rate hasn’t been spectacular and will be knocked off the Canadian dividend all star list after 14 years of dividend raises.
At 11.70 per share it currently is 40 cents above its 52 week low. While it’s 52 week high is 14.10. And its current Price/Earnings ratio of 12.2. I feel the stock has hit a floor and should go up, but who knows. =)
While some media stocks are trading with crazy price to earnings ratios *cough netflix at 194.2 times cough* there are still low ones out there like Corus. Just like retail, I feel Radio and T.V companies are getting dragged through the dirt. These types of companies aren’t dead and represent a good buying opportunity at the moment. Just keep in mind whenever a stock offers a yield this high, there’s always the risk management might cut its dividend.
In a market that has crazy valuations, pot and crypto hypes beyond belief. It’s nice to bottom feed and grab some not so “hot” stocks. This lowers my dollar cost average of Corus Entertainment, Enables a drip each month and pumps up my forward dividend’s. Not bad. What do you think?
Cheers and Have a fantastic Weekend/ New Yrs!