The Canadian cable MSO
Shaw Communications Inc.
) has raised its dividend rate. The Board of Directors has
increased annual dividend rate to $1.02 on its Class B Non-Voting
Participating Shares and $1.0175 on its Class A Participating
Shares. This represents an increase of 5% or $0.05 per share.
Revenue growth along with improvement in margins and free cash
flow as the company discontinued its promotional activities
altogether contributed to the dividend hike. Whenever the company
tried to reduce its promotional activities, it lost a large
amount of pricier subscribers. On the other hand, higher
promotional activities are impairing its bottom line and free
cash flow. It seems management has finally found out an
appropriate trade-off between these two situations.
In the first quarter of fiscal 2013, Shaw Communications
revenue increased 3.1% year over year. Notably, the company's
revenue increased in all its three reporting segments. While the
Cable segment revenue inched up 2.1%, the Satellite segment and
Media segment revenue climbed 2.4% and 6.7% respectively. Shaw
Communications has launched - "Shaw Go" - an innovative TV
Everywhere service, which is available only on
) iPad 2 and iPhone 5.
In the first quarter of fiscal 2013, consolidated operating
margin of the company was 45.6% compared with 44.2% in the
prior-year quarter. Cable segment operating margin inched up 1.3%
to 48.9%, Satellite segment operating margin increased 1.6% to
34.6% and the Media segment also follow suite with a 1% operating
margin expansion to 41.1%. Quarterly free cash flow skyrocketed
to C$244 million from just CS$119 million in the year-ago
We maintain our long term Outperform recommendation on Shaw
Communications. Currently, the stock has a short term Zacks Rank
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