September 3, 2014

Yellow Media Inc. (YLO)

 


 

On the outside investing in the company whose chief holding is the iconic Yellow Pages phone book in Canada should be considered safe and stable investment.  The Yellow Pages have been around forever in Canada, and I’m sure my dad still uses it faithfully.  That’s the problem though… I don’t use it at all, only my dad does.  This may help explain the recent downfall of Yellow Media Inc. (YLO).  This is an example of a stock that was really hurt when it moved from the tax advantageous position of being an income trust, to having to pay taxes before distributions as a corporation.  The company’s balance sheet was shaky to begin with, and now it has a .94 debt-to-capital ratio and shrinking revenues thanks to the digital age and their print-heavy medium of delivery.

 

yellow pagesIf it seems like only a few months ago Yellow was on top of every dividend lover’s list, that’s because it is!  Yellow (YLO) was paying a great dividend as an income fund, and it seemed fairly stable even taking into consideration the obvious future challenges that were approaching thanks to changing technologies.  It had its IPO in 2006 and was chugging along with double-digit dividends every quarter (or at least close to) and investors were counting their dividend checks all the way to the bank (can we still use that metaphor now that instant banking has basically eliminated “walks” to the bank?).  Yellow Media Inc. (YLO) does have an online business in Canada411.ca, but this hasn’t panned out like the company had hoped.  Its line of Trader products that included monthly periodicals and websites that basically acted as buy-and-sells of every machine on the market had seen its profits shrink due to increased competition from Kajiji and Ebay amongst others.  Due to the recent economic tough times for Yellow, it had to sell the Trader properties for 745 million just to stay positive on their balance sheet and avoid having their corporate bonds labelled as junk.

 

With all this negative news surrounding the print media company the stock was recently pushed down to a low of $0.25 a share (a far cry from its IPO heyday).  Incredibly, at this point the company might actually be a bargain.  Yellow Media Inc. (YLO) has obviously placed an absolute premium to attracting investors through a high dividend.  As of right now their dividend is sitting at an unbelievable 27%!  Obviously the company will likely cut this dividend in order to stabilize things and hopefully pay down some of their scary debt load.  That being said, even if they cut the dividend in half (an absolutely drastic cut for a mature company) it still represents a great value.  Most analysts I have read still rate the company as an average performer in the sector and the bottom line is that there are still many people out there like my dad who look forward to the Yellow Pages every year.  The over-correction by the market might represent the perfect buying opportunity for this little dividend player.  Once companies start to have the excess cash to invest in print advertisements again, Yellow Pages Inc. (YLO) may very well stabilize and turn back into a small little company that grinds out dividends to its shareholders.  With so many older investors looking to park their money somewhere in an income-producing asset, I’m sure there are some that will see the stock as a calculated gamble that is worth a shot.  Personally, I prefer a solid company with a history of raising its dividend that might cost me a little more to acquire, but is also something I don’t have to lay awake thinking about at night.

 

YLO Dividend Graph:

TSE YLO

YLO Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
YLOYellow Media Inc4.4214.71148.58Publishing-Periodicals0.94-5.15-6.25

 

 

 

Torstar Corp (TS/B)


 

Torstar Corporation (TS/B) is one of the most prominent media entities in Canada.  While their name obviously comes from their chief asset – The Toronto Star Newspaper – the company has plenty more holdings than just a regional daily.  Torstar now owns over 100 newspapers in print in a wide variety of markets.  They also own a publishing company named Harlequin that has become synonymous with the romance novel genre and has several other smaller media interests. Perhaps the most important aspect of Torstar’s business plan going forward is their presence in the technological sector, which will no doubt expand in the years to come.  It is safe to say that investing in Torstar (TS/B) gives investors a piece of an extremely well diversified media company.

 

TorstarThe important online aspect of the Torstar company has been responsible for much of the company’s profits.  Their subsidiary Torstar Digital, “Develops online solutions across the media operation to meet the needs of online advertisers, consumers and readers.”  In addition, the company also own notable digital businesses such as Workopolis (the main Canadian career website) and Olive Media (a world wide web advertising company that has a great reputation for quality, service, and innovation).  In 2010 Torstar Digital bought out the Canadian frugal sensation WagJag which has seen sensational growth that does not appear to be slowing down.  By following a Groupon-model, WagJag stands to cash in as thriftiness grows more and more popular amongst Canadians.

 

Times within the media sector have been tough for everyone involved, but Torstar Corp (TS/B) has been able to weather the storm better than most simply because of its online properties and the diverse streams of income the company enjoys.  In their most recent statement Torstar asserts, “Our goal at Torstar is to be a growing progressive media organization that takes advantage both of the breadth of the assets currently at out disposal and the depth and quality of talent throughout our many businesses.”  This is the sort of mindset I would be looking for from a modern-day media company.  With the state of media changing so quickly, companies have to be dynamic and forward-thinking to keep up, and I believe Torstar (TS/B) has done that.  The statement went on to say, “To ensure our success, we will aggressively seek to broaden and diversify Torstar’s revenue base building from within, acknowledging that sustained future growth will at times require investment in areas that may lie further from our traditional core.”  This is music to the ears of companies who are finally seeing budget dollars pouring back into advertising after being slashed so drastically during the recent recession.

 

Torstar Corp (TS/B) appears to have done a great job of diversifying away from the pure print medium that has been characteristic of other newspaper companies around North America, and has consequently recorded some modest profits the last few years.  Their dividend sits at a respectable 2.59% and the stock has a very attractive Price-to-Earnings ratio of 12.33.  While dividend-growth gurus would wisely point out that Torstar’s dividend has seen an 11.47% cut over the last five years, I would respond that the industry was hit particularly hard due to the advertising situation I previously mentioned.  Torstar was also aggressively using cash flow to expand in various directions that I think will give Torstar (TS/B) a true competitive edge in the years to come.

 

Torstar Corp (TS/B) Dividend Graph:

TSE TSB

Torstar Corp (TS/B) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
TS/BTorstar Corp12.773.9248.04Publishing-Newspapers0.43-12.940.00

 

Thomson Reuters (TRI)


 

Thomson Reuters (TRI) is a global conglomerate that has a hand in many different types of businesses all over the world.  They were recently ranked 39th on a list of best global brands, and were also labelled, “Canada’s Leading Corporate Brand,” in 2010 by the Interbrand Best Canadian Brands ranking.  The headquarters of this corporate behemoth is located in Times Square in New York and directs operations in 100 countries that employ over 55,000 people.  Thomson Reuters is incredibly well diversified and separates its operations into two main divisions: Professional and Markets.  Their official statements describe the company as a, “Leading source of intelligent information for businesses and professionals.”  They offer a huge range of services under that umbrella and operate in sectors that include financial, legal, tax, healthcare, science and media services.  They are also a notable force within the news industry.  Obviously Thomson Reuters (TRI) is a global juggernaut that is about as diversified as a company can be across many different industries and locations.

 

Thomson ReutersThe Thomson family from Ontario, Canada owns about 53% of Thomson Reuters and the company was founded by Roy Thomson in 1934.  It started as a small daily newspaper company, and expanded into the television market in 1957.  The next decade seen Thomson acquire larger and more well-established newspapers, and then take a huge leap when he bought out Britannia Airways in 1965.  Obviously at this stage the empire we see today was well underway.  In 1971 Thomson Reuters (TRI) got into the oil exploration in the North Sea.  When Roy (now Lord) Thomson passed away the company gradually moved away from media and into publishing when they bought Sweet and Maxwell in 1987.  Several more mergers brought the newly coined “Thomson Corporation” to purchase Reuters in 2008.  This was a massive merger that seen Thomson acquire a company that had been founded way back in 1851 and had been involved in stock market quotes, telegraph operation, radio pioneering, and a large media empire.  By 2009 the post-acquisition corporation had completed its metamorphosis into the giant we see today.  Thomson Reuters (TRI) is now only listed on the New York Stock Exchange and the Toronto Stock Exchange.

 

Thomson Reuters is the definition of a strong dividend play.  It is an extremely stable and mature company that is broadly diversified and has several durable competitive advantages over their competition.  Their name recognition and huge capitalization make the stock very attractive to investors who are looking for safe havens.  In fact, that is likely why investors have been buying the stock and keeping it at a 23 Price-to-Earnings ratio despite a week economy.  It has a great balance sheet and even offers some growth potential even though it is a mature company due to its broad business base.  Even with its relatively expensive evaluation Thomson Reuters (TRI) still offers a stable 3% dividend yield that has seen moderate growth over the past 5 years.

 

Thomson Reuters (TRI) Dividend Stock Graph:

TSE TRI

 

Thomson Reuters (TRI) Dividend Metrics

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
TRIThomson Reuters Corp37.783.17106.62Multimedia0.244.05-1.60

McGraw-Hill Ryerson (MHR)

McGraw-Hill Ryerson (MHR) is the major textbook provider for Canadians of all ages.  The company is fond of pointing out that it reaches Canadians at all levels of their education, right from their early years to their professional lives.  The current company is a product of the two large textbook corporations (McGraw-Hill and Ryerson) that combined to form a virtual monopoly within the industry.  With professors and universities still holding students ransom for high textbook costs, and elementary-through-high school education still being a virtual goldmine of tax payer dollars, one would assume that McGraw-Hill Ryerson would be positioned to be an extremely profitable company.  This has not been the case as of yet, and the company has suffered through some lean economic times along with the rest of the print industry.
The McGraw-Hill Ryerson (MHR) website states the company seeks, “To be recognized as the leading Canadian publisher of educational solutions for lifelong learning and enjoyment.”  The company’s mission promises that, “To be the Canadian leader in developing and marketing quality information products and services to selected educational, professional, and consumer markets through innovation, teamwork, and partnerships. We will provide exceptional value to customers, growth and recognition opportunities for employees, and outstanding financial performance to our shareholders.”  While these quotes sound great, obviously many investors out there are not sure of their validity.  The ultra-low price-to-earnings ratio of 10.61 means that either the stock is priced very cheaply and now is the time to snap up the company, or people believe that the business model is intrinsically flawed, and that the losses of the past year were not a fluke or one-time event.

 

McGraw HillMcGraw-Hill Ryerson has the curious distinction of raising its dividend over the past five years, yet having negative sales growth.  I’m not sure if this means that the mature company is running out of innovative ways to find competitive edges within new world of student media, or if they simply are flush with cash and wish to pay it out to their shareholders.  I do know that their 1-year sales loss of nearly 8% and 5-year loss of 6.8% overall do give me pause as I consider whether to recommend them or not.  The odd thing is that their current yield is 2.83% as a result of 21.57% growth over the last 5 years and the company has no debt to speak of.  Anytime a stock as a P/E of less than eleven, has a yield near 3%, a massive competitive advantage within their region (Canada), and a solid balance sheet, they should really be considered.

 

The problem with recommending the textbook giant is that current trends amongst students are aimed at lessening the profits McGraw-Hill Ryerson (MHR) is seeing.  Post-Secondary students on a budget are taking advantage of used book websites.  Kindle readers and other technologies are also likely cutting into McGraw-Hill Ryerson’s profit margins.  Information in general today is much easier to access than ever before and this does not bode well for such a focused company in that specific market such as McGraw-Hill Ryerson (MHW).  If the company can evolve and adjust to new trends in the market, this could be an ideal time to snap up the stock; however, given the past five years, and the obstacles I just outlined, I would definitely do my homework before committing to a position.

McGraw-Hill Ryerson (MHW) Dividend Stock Graph:

TSE MHR

 

McGraw-Hill Ryerson (MHW) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
MHRMcGraw-Hill Ryerson Ltd42.812.6693.46Publishing-Books0.0023.9372.42

FP Newspapers Inc (FP)

 


 

FP Newspapers Inc. (FP) gets their name and ticker symbol from their main business: The Winnipeg Free Press.  The newspaper has been successful when judged by any metric relative to other print media (the caveat of course being that print media has not been successful at all).  The “FreeP” as it is affectionately known as, holds a commanding market share in Manitoba and has a circulation of about 129,000.  The iconic newspaper has roots that go back 137 years and its high level of journalism has allowed it to dominate the local news market in Manitoba.

 

FP newspapersBesides the WFP, FP Newspapers Inc. (FP) also owns a few other print media entities.  Including several community-based weekly newspapers, the Brandon Sun, and their new acquisition of a Derksen Printers and their weekly periodical known as “The Carillon” which circulates throughout the Southeast corner of Manitoba.  The Brandon Sun has been in business almost as long as the Free Press itself (125 years).  It serves not only the area of Brandon, but the surrounding rural communities as well.  It has a circulation of about 71,000 readers and has a strong local flavour focusing on the local weather, farm reports, and sports teams.

 

The smaller Winnipeg-based community newspapers that FP Newspaper Inc. (FP) owns are The Lance, The Metro, The Herald, The Times, The Sou’wester, and The Headliner.  They each cover specific part of Winnipeg and the bedroom communities that surround them just outside of Winnipeg.  They get published weekly and have a combined circulation of 182,000.  These papers are also well-established names and many have been in business nearly 100 years by themselves.

 

The FP stock is representative of the whole print media industry in Canada at the moment.  If you think that companies will pull out of this downfall and will re-invest in these modes of advertising when they are flush with cash again, then there will likely never be a time when you can buy such a well-established paper at this rate.  With and absolutely ridiculous Price-to-Earnings ratio of 4.83 and a dividend yield of over 12%, the metrics look too good to be true for a company that has been around as long as the “Freep.”

 

My take on the stock is essentially the old cliché, “If something appears too good to be true than it usually is.”  The price of FP Newspapers Inc. (FP) is low because there is no market demand for it.  It’s dividend has dropped over past few years just like that of other print media, and it appears like most investors have little faith that newspapers are one medium that have lost their message.  With so many other solid places to invest your dividend-earning cash within Canada, I would suggest this stock is for the risk-takers out there and with revenues down over 5% from last year I would stay away.

 

FP Newspapers Inc. (FP) Dividend Stock Graph:

TSE FP

 

FP Newspapers Inc. (FP) Dividend Metrics

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
FPFP Newspapers Inc5.4610.9969.33Publishing-Newspapers0.00-12.02-32.00

Evertz Technologies (ET)

 


 

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.

 

EvertzEvertz Technologies (ET) was founded in 1966 and is headquartered in Burlington, Ontario.  They focus on, “Producing cutting edge products and responding to customer needs and market trends.”   The company now employs over 900 people.  Evertz believes that what sets their business model apart from their competitors within the industry is their commitment to research and development, their high manufacturing standards, and their loyalty to long-term business relationships.  Over the last couple of years Evertz (ET) has been focused on expanding internationally and have opened up locations in California, Croatia, Dubai, England, Hong Kong, New York, and Washington DC.

 

Evertz Technologies (ET) is one of the major players in finding solutions for the new High Definition Television (HDTV) environment.  They claim that their services make audio and visual communication companies more efficient through streamlining their signal routing, distribution, monitoring, and management of content operations.  They also specialize in the automation of previously manual tasks.  Evertz has been one of the pioneers in the Internet Protocol Television (IPTV) industry.

 

Evertz’s first quarter was not its finest hour as they had to report a 10% drop in earnings relative to the first quarter of 2010.  It seen sales drop from $75,285,000 to $68,532,000 and net earnings fell to $17,370,000 from $24,269,000.  In terms of earnings-per-share, the numbers dropped from $0.21 a year ago to $0.16.  That being said, the company recently released the details of a massive (relative to the overall size of the company) new 7 million dollar deal with an international buyer which is bound to help smooth out their quarterly and yearly numbers.  Evertz Technologies (ET) has a market cap of just under 1 billion dollars, and a price-to-earnings ratio of about 11.  It pays out a dividend worth $0.48 cents to its shareholders which gives the stock a respectable yield of 3.7%.  The company likely has some of the largest growth potential you’re going to see with a dividend that high, but I am biased towards larger market cap stocks that have a long history of raising their dividend.  If its long-term stability you’re looking for there are probably better choices out there.

 

Evertz Technologies (ET) Dividend Stock Graph

TSE ET

 

Evertz Technologies (ET) Dividend Metrics

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
ETEvertz Technologies Ltd16.32.4538.19Industr Audio&Video Prod0.00N/A18.75

 

Corus (CJR.B)

 

Corus (CJR.B) is an entertainment company that was originally part of the telecommunications giant Shaw Communications (SJR.B).  It was founded by the same JR Shaw that has led that company to the notoriety it enjoys today.  In 1999 Corus was officially spun off of Shaw to become its own publicly traded company.  Since that time is has seen extensive growth through targeted acquisitions and is now one of the bigger picture and voice media companies in Canada.  It is probably most well known for offering a variety of speciality programming channels that include such diverse offerings as the Teletoon cartoon network and the famous HBO channel.  Corus (CJR.B) also owns 37 of the most popular radio stations across Canada.

 

CorusCorus has been successful by providing a very wide array of entertainment options.  Its programming brands span every type of demographic and interest on the spectrum.  Brands that you might be familiar with include kids channels YTV, Treehouse, Nickelodeon, and Teletoon, and women specific brands like, W Network, Cosmopolitan TV, OWN: Oprah Winfrey Network (in Canada), and W Movies.  Other high profile options include Country Music Television (CMT), Sundance Channel, Movie Central, and nine other movie channels, as well as HBO Canada.

 

Corus’ radio stations offer a similarly diverse package.  Operating out of Canada’s biggest cities the company owns leading news-radio stations that purport to be the best in Canada as well as classic, rock, country, and contemporary music.  It’s main competitor in this sector, as well as in its television programming is Astral Media (ACM.A) which is an extremely similar company.

 

Corus (CJR.B) has made an extensive effort to give back to communities across Canada.  Each year they work with various different charities and non-profit organizations to donate millions of dollars worth of air-time to help local-fundraising efforts.  Corus’ vision is, “To be globally recognized as Canada’s most influential entertainment company.”  They site values such as, “Accountability, Initiative, Innovation, Knowledge and Teamwork,” as some of the chief reasons for their success in the industry.

 

With the financial and strategic support of the famous Shaw family to back up the Corus (CJR.B) brand there is little doubt that the company will be a force on the Canadian scene for a long time to come.  The communications assets behind the Shaw empire are no doubt a huge advantage to Shaw as it continues forward.  It offers up a very competitive 3% dividend that has seen increases of over 47% over the last 5 years, and the sales increases to back up that return of investment to shareholders.  It is now trading at a fairly attractive Price-to-Earnings ratio of about 12.5.  My advice would be compare the company to Astral Media (ACM.A) and if you firmly believe in one of the other it makes your decision easier, but you may just decide that this is a great time to buy undervalued entertainment/media stocks and want to own them both to take advantage of future growth opportunities.

 

Corus (CJR.B)Dividend Stock Graph:

TSE CJR

 

Corus (CJR.B) Dividend Metrics

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
CJR/BCorus Entertainment Inc20.223.7138.23Multimedia0.4447.0514.58

Cineplex (CGX)

 

 
Most of you are probably fairly familiar with Cineplex (CGX) as their brand has almost become synonymous with going to the movies in Canada.  They are the largest motion picture company in Canada and their brands include Cineplex Odeon, Silvercity, and Famous Players movie theatres.  Overall they own 129 theatres that serve roughly 70 million people annually.  The company headquarters are located in Toronto, and Cineplex (CGX) employs more than 10,000 people across the country.

 

cineplexMany people have been predicting the downfall of “a night at the movies” for a long time now.  The theory goes that with so many more convenient options available for people’s entertainment, the theatre just can’t compete.  While there may be a ring of truth to the idea that big screen TVs, 3-D home entertainment units, and the internet have cut into the consumer base slightly, there is obviously more than enough people still in the market to make it very profitable.  I believe there is likely something about a night out of your house, experiencing entertainment with a group of people and feeling that “electricity” of a new movie that will never go out of style.  That being said, there is no question that new innovations such as Netflix have brought significant challenges to the industry, and Cineplex will have to keep on their toes to stay ahead of the curve.

 

There is also little question that as an entertainment medium that depends on advertising for a large share of its revenue, Cineplex has been at a disadvantage over the past few years.  It is well documented that within the industry there have been many revenue shortfalls due to the fact that big companies that would traditionally supply the big advertising dollars just couldn’t find it in their budget to put that much money forward the last few years.  This makes sense since it is pretty well known that when a company looks to cut costs, advertising is one of the first things to go.

 

Despite these challenges to the whole media sector Cineplex (CGX) has seen their revenues increase over 17% over the last year, and their profits have shot up over 26% during the last three years (again worth nothing that these numbers were achieved in bear market).  As companies’ balance sheets begin to improve look for profit margins to go up for Cineplex as their advertising dollars start to pour back in.  They have a great Price-to-Earnings ratio of just over 10 right now, and offer a juicy 5% dividend yield.  Cineplex is definitely well positioned within the industry and I would not be surprised to see them increase their dividend when the market picks up, and possibly even step up their acquisition efforts.

 

Cineplex (CGX) Dividend Stock Graph:

TSE CGX

 

Cineplex (CGX) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
CGXCineplex Inc26.164.93113.04Theaters0.281.850.00

 

 

Astral Media Inc. (ACM)

 

 

Astral Media Inc. (ACM) is one of a select few Canadian media companies that can legitimately call themselves leaders in the market.  They have been consistently diversifying their operations and now have large holdings in radio, television and an innovative program called “out-of-home advertising.”  Astral also has about a hundred websites that see millions of visitors every year and offer a variety of interactive experiences and products online.  The company’s headquarters are located in Montreal and Toronto and the company employs about 2,800 people.  Its main competitors would be Corus Entertainment (CJR.B), and increasingly the four main telecommunications giants: Shaw Communications (SJR.B), Rogers Communications Inc. (RCI.B), Bell Inc. (BCE), and Telus corp. (T).

 

astralThe company can trace its lineage back to four brothers: Harold, Harvey, Sidney, and Ian Greenberg.  They started up a humble photo-finishing shop in 1961.  In 1973 the company merged with the French company Bellevue Pathe to form a publicly-traded business that specialized in the distribution of films and television programs.  The Greenberg family was the largest shareholder and Harold became the CEO.  In 1983 the company started its foray into television when it took control of two channels named “The Movie Network” (still a major player today) and “Super Ecran.”  Over the next couple of decades the company expanded steadily by acquiring media assets all over Canada.  Finally, in 2000 the former Astral Communications changed its name to Astral Media and has continued to expand ever since.

 

Astral Media Inc. (ACM) is proud of the fact that it is one of the most diverse media companies in Canada.  It boasts a revenue breakdown that is 57% TV, 35%, Radio, and 8% out-of-home advertising.  Astral’s radio division operates 83 licensed radio stations across 50 markets in Canada.  By any measure including revenue, number of stations, or number of employees, Astral Radio is the largest radio broadcaster in Canada.  It includes some of the most well-known brands within the industry.  One of its core strategies is promoting local music and innovative new programming.

 

Astral Media’s TV division is the largest provider of English and French language pay and speciality television in Canada.  In fact, along with Corus and Shaw (through their recent acquisition of Global), they pretty much have the market cornered.  Astral (ACM) offers high quality channels like Showtime and HBO to the Canadian market, along with a number of niche special-interest channels like Vrak and Family Channel. Niche channels has been a very profitable and fast growing division of Astral. People are more intend to pay an access to a niche channel than regular TV as they can watch what they are looking for only.

 

Astral Media Inc (ACM) is plainly well positioned within the industry.  Even during a lean time in advertising the company seen an earnings growth of 20%.  If you’re looking for strong divided plays however, Astral may not be for you.  It’s dividend at 2% might be strong when looked at overall, but against other major players in the industry it lags behind.  If you choose to take the view that Astral is taking its earnings and strengthening its balance sheet, or pursuing acquisitions that will set it up better in the long term, than it may make sense for you to consider the company despite the lower dividend numbers.  I just think that when you compare the stocks numbers to those of its competitors’ it doesn’t compare favourably.

 

Astral Media Inc (ACM) Dividend Stock Graph:

TSE ACM.A

 

Astral Media Inc (ACM) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
ACM/AAstral Media Inc36.62.0515.25Multimedia0.2920.1125.00

 

 

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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