October 20, 2014

Canadian Dividend Stocks in Media

 

Like the majority of industries within Canada, the media market is controlled by a few large conglomerates.  Corus Entertainment Inc (CJR/B) and Astral Media Inc (ACM/A) join the mega-telecommunications giants when it comes to delivering media through television and radio.  McGraw-Hill Ryerson Ltd. (MHR), Torstar Corp (TS/B) and FP Newspapers Inc (FP) are all in the print media business (which has come under fire in recent times.  Evertz Technologies (ET) is a business that produces the equipment needed by the media industry and exports products all over the world.  Thomson Reuters (TRI) is a corporate giant that provides professional advice, software and programming for a variety of purposes and clients.  Finally, Yellow Media Inc (YLO) is the entity behind the iconic yellow pages phonebook and a few other periodicals such as the car/truck trader franchise.  These companies (and one could argue that telecommunications companies Rogers, Bell, Shaw and Telus should be included in this category as well due to their large media presence) represent the significant players if you are wishing to invest in Canada’s media sector.

 

media canadian dividend stocksOverall, the media sector has been working through some recent challenges.  The economic downturn hurt the bottom lines of many companies, but there were few sectors hurt worse than media since it depends on advertising for revenue and advertising is one of the first areas a company cuts back on when income is down.  This has been combined with the effects that technology has had on the industry as a whole to create what can be charitably called a “transitional time” for several for several of these companies.

 

The print companies have been affected most drastically over the past few years.  The most recent example being Yellow Media Inc.  Yellow went public in 2006 and its policy of not dropping its dividend even as its stock price fell, leapt it to the top of many Canadian dividend charts.  Most investors realized that the double-digit dividend yields were unsustainable, and the company looks to be in quite a bit of trouble as its shares have tumbled over the last few days to a low of $2.40 per share (the 27% yield obviously can’t last very long, although at that price it looks good on paper).

 

Torstar Corp (TS/B) started as the Toronto Star newspaper and now owns a broad range of information media properties including a rapidly diversifying technological segment.  They now own parts of over 100 newspapers that are published in 26 different languages.  Torstar has also dabbled in publishing romance novels, and a few other smaller media pursuits.  Their most recent company statement reports, “Our goal as Torstar is to be a growing progressive media organization that takes advantage both of the breadth of the assets currently at our disposal and the depth and quality of talent throughout our many

businesses.”  Torstar appears to have done a great job of diversifying away from the pure print medium that has been hitting other newspapers around North America, and has consequently recorded some modest profits the last few years.

 

The same cannot be said for their print-media brethren at FP Newspapers Inc (FP) and McGrawn-Hill Ryerson Ltd (MHR).  FP stands for Free Press which is a news source that I am familiar with having grown up in the Winnipeg area.  Its major asset, the Winnipeg Free Press, continuously boasts the highest readership rates in its market for all of Canada.  It also owns other regional newspapers such as the Brandon Sun and The Carillon.  FP’s revenues were down 5.2% from first quarter numbers in 2010, and their lack of diversification will hurt them going forward if they are not able to adapt to the new means of media consumption that younger generations prefer.

McGraw-Hill Ryerson is a textbook giant that used to be two separate companies until they amalgamated.  They have a virtual monopoly on the Canadian textbook industry at this point, yet curiously their revenues and profit numbers were down last year as well.  Their stated vision is, “To be recognized as the leading Canadian publisher of educational solutions for lifelong learning and enjoyment.”  They should be a fairly stable dividend payer, but the movement amongst students to recycle texts online and the growing presence of lower profit-margin products such as kindle-based textbooks, may be what is responsible for cutting into revenues.

Corus Entertainment and Astral Media are both primarily TV programming entities.  They have recently faced stiff competition from mega-telecommunications companies that have bought out their old competition and are now re-packaging their products.  Corus (CJR/B) was created by the same JR Shaw that created the Shaw Communications Empire.  It was officially split off to become its own company in 1999.  Corus offers many speciality programming channels from cartoons to HBO.  It also owns 37 of the highest ranked radio stations across Canada.  Astral is a similar company with 22 television offerings that span a broad range of themes and 83 licensed radio stations.  One unique aspect of Astral’s business is its out-of-home advertising branch, which has seen steady growth.  Their revenue breakdown is 57% TV, 35%, Radio, and 8% out-of-home advertising.  Both companies appear to have solid market share, but could also be in prime position for mergers in the coming years.

 

Cineplex (CGX) is the largest motion picture company in Canada.  They own 129 theatres that serve roughly 70 million people annually.  Headquartered in Toronto and employing 10,000 people, Cineplex is a titan in the Canadian movie industry.  Their brands include, Cineplex Odeon, Famous Players, and Silvercity Theatres.  In the past three years Cineplex has seen their revenues increase over 17% and have impressively seen profits increase over 26% during the last three years.  When you factor in that Netflix has been eating into the movie market during that time, plus the fact that the bare economy is not good for luxuries such as a night at the movies, and what Cineplex has done is even more impressive.  They are well positioned within Canada to be the dominant name within the industry for years to come.

 

Thomson Reuters (TRI) is technically classified as a media company, but that is only part of what they do.  Their overall company description is so broad that it is almost a little vague.  Their own press releases describe the company as a “Leading source of intelligent information for businesses and professionals.”  They offer services in the financial, legal, tax, healthcare, science and media markets.  They are also a behemoth in the global news industry.  The Thomson Reuters headquarters is in New York, but the employ over 55,000 people in over 100 countries.  The Thomson Reuters brand name is so well known that it was recently ranked 39th on a list of best global brands.  Thomson is incredibly diversified across multiple industries and regions.

 

Evertz Technologies (ET) is responsible for creating and producing much of the hardware and software needed in the broadcast industry in Canada, the USA and internationally.  As you may imagine with the recent downturn in media’s fortunes, Evertz has not been left unscathed.  Its revenues and profits have both taken a hit in the last year few years (to the tune of a 10% drop in first quarter numbers), but they are still strongly positioned within the industry.

 

If you were looking to invest in safe Canadian dividend-payers with potential for growth I might stay clear of the media industry as a whole (especially with such attractive options in the financial and energy sectors).  That being said, the Thomson Reuters company does look very attractive as a paragon of diversity and stability with plenty of room to grow.  Their reasonable 3% yield, low debt ratios, and huge international exposure, give it several advantages within the sector, and they would unquestionably be my pick right now.

Here’s the full list of Media Canadian Dividend Stocks:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
CJR/BCorus Entertainment Inc20.223.7138.23Multimedia0.4447.0514.58
TRIThomson Reuters Corp37.783.17106.62Multimedia0.244.05-1.60
ACM/AAstral Media Inc36.62.0515.25Multimedia0.2920.1125.00
ETEvertz Technologies Ltd16.32.4538.19Industr Audio&Video Prod0.00N/A18.75
MHRMcGraw-Hill Ryerson Ltd42.812.6693.46Publishing-Books0.0023.9372.42
FPFP Newspapers Inc5.4610.9969.33Publishing-Newspapers0.00-12.02-32.00
TS/BTorstar Corp12.773.9248.04Publishing-Newspapers0.43-12.940.00
YLOYellow Media Inc4.4214.71148.58Publishing-Periodicals0.94-5.15-6.25
CGXCineplex Inc26.164.93113.04Theaters0.281.850.00

Thomson Reuters (TRI)

Astral Media Inc (ACM/A)

Evertz Technologies (ET)

Cineplex (CGX)

Corus (CJR/B)

Newspapers Inc (FP)

McGrawn-Hill Ryerson Ltd (MHR)

Torstar Corp (TS/B)

Yellow Media Inc (YLO)

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Trackbacks

  1. [...] Evertz Technologies (ET) is an innovative technology company that basically provides the hardware and software needed by the media industries in Canada, the USA, and even internationally.  In their own words Evertz, “Designs, manufactures and markets video and audio infrastructure equipment for the production, post production, broadcast and internet protocol television (IPTV) industry.”  Their clients range from small speciality channels, to mega telecommunications companies looking to build their IPTV prescence, to content creators themselves.  So it’s a techno stock providing services to media companies . As the Canadian Dividend Stocks are shy of techno, I put ET in the Canadian Media Dividend Stocks. [...]

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