Monthly Dividend Stock In Focus: Shaw Communications

Shaw Communications (SJR) is a rare stock. It is based in Canada and is the only telecom stock with a monthly dividend. The stock is listed in both New York and Toronto, and we’ll be using the latter throughout this article unless otherwise noted.

While the U.S. telecoms like Verizon (VZ) and AT&T (T) pay quarterly dividends, Shaw’s monthly payouts allow investors to compound their dividend growth more quickly.

Indeed, Shaw is one of just 41 stocks that pay monthly dividends.

The other advantage for Shaw is it is outside the highly-competitive U.S. wireless market.

Shaw is growing subscribers and revenue, which fuels its 4.3% dividend yield. In addition, its impressive growth leaves the possibility for dividend increases moving forward.

This article will discuss Shaw’s business model and why the stock could be an attractive option for income investors.

Business Overview

Shaw is a diversified telecommunications company. The company recently consolidated its four prior reporting segments into just two. Shaw no longer breaks out its services by customer type, but rather into just Wireline and Wireless services.

(Click on image to enlarge)

Source: Investor Overview Presentation, page 3

In terms of service revenue, Shaw’s segment breakdown is as follows:

  • Wireless (18% of revenue)
  • Wireline (82% of revenue)

Shaw provides customers with a wide variety of services, including satellite video, fiber-coax network connectivity, and mobile phone services, among others. The company serves consumers and small to medium businesses in its service area, which includes much of Canada. The bulk of the company’s revenue is from consumers.

Shaw has struggled a bit in recent years to grow earnings as it has undergone a strategic transformation.

(Click on image to enlarge)

Source: Investor Overview Presentation, page 6

Shaw, in the past three years, has acquired Freedom Mobile, divested its former media business, acquired wireless spectrum licenses from Quebecor, and divested its ViaWest business. These changes have left the company more focused on its long-term goals of sustainable growth.

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