Rogers Raises Shareholders' Wealth

Rogers Communications Inc. (RCI - Analyst Report) recently announced a hike in annual cash dividend by 16 cents or 10% to $1.74 per share (43.5 cents quarterly) on its common stock. The company will start paying the new quarterly dividend of 43.5 cents per share to both class A and class B shareholders on Apr 2, 2013, to shareholders of record, at the close of business on Mar 15, 2012.

Rogers has been paying dividends uninterruptedly for the last 10 years with continuous increase or decrease in dividends over the period. The current dividend yield is 3.7% with a dividend payout ratio of 0.46.

At the end of the fourth quarter of fiscal 2012, Rogers had $212.7 cash and cash equivalents while it generated $667 million of cash from operations during the reported quarter. The excess cash available with the company will be utilized to repurchase shares or to pay dividends to its shareholders.

Shaw Communications Inc. (SJR - Analyst Report), TELUS Corporation (TU - Analyst Report) and BCE, Inc. (BCE - Analyst Report), belonging to the same industry, paid quarterly dividends of 26 cents, 65 cents and 57 cents with dividend yields of 4.3%, 3.8% and 5.1%, respectively. Hence, dividend yield of Rogers happens to be the lowest as compared to these three companies.

Apart from raising the shareholder’s value by means of increasing dividends, Rogers also issued a share buyback plan of $500 million during fiscal 2013. Earlier, in 2012, the company had already bought shares worth $350 million.

We believe that such increased dividend payment coupled with such aggressive stock buyback plan may impact Rogers’ cash flow going forward, thereby expanding its current debt-to-capitalization ratio of 0.73.

Moreover, Rogers plans to fully deploy 4G LTE across its footprints may further deteriorate its cash position while moving ahead.

Currently, Rogers Communications has a short-term Zacks Rank #3 (Hold).