Shaw Communications Ranks Among Top Monthly Dividend Stocks to Buy

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Consumer Goods Stocks

Shaw Communications ranks among top monthly dividend stocks to buy during the COVID-19 pandemic. 

Shaw Communications, Inc.  (NYSE: SJR) of Calgary, Canada, operates as a diversified communications company in North America that provides telephone, internet, television and mobile services backed by a fibre optic network. The company operates through both wireline and wireless segments, provides Wi-Fi, digital phone communications and satellite services.

Shaw Communications serves both residential and commercial consumers throughout the United States and Canada.

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Performance: Shaw Communications Ranks Among Top Monthly Dividend Stock to Buy 

Shaw has had a 10% decrease in stock price over the last year, falling from $20.10 to $18.09. More recently, SJR took a large hit in March 2020 at the height of the economic crisis. At the time, the stock price plummeted 32.82% from $18.19 to $12.22. Since that large price drop, SJR’s stock has been recovering steadily, and the price currently sits at $18.38. SJR’s stock price is close to making a complete recovery to its 52-week high of $20.90. The stock’s rebound speaks volumes about the company’s business model, resiliency and financial health. 

For the twelve months ending May 31, 2020, Shaw Communications reported gross profit of $1.7386 billion. This is a 5.06% increase year-over-year. Profit growth is a solid indication that a company has strong business model fundamentals.

Current Dividend Yield and Payouts 

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Shaw has a current dividend yield of 4.62%. The company is paying a monthly dividend of $0.073, producing an annualized payout of $0.875. Shaw has had two consecutive years of increasing its  payouts, and has attained a 10-year dividend growth rate of 1.99%.

Price/Earnings Ratio: Shaw Communications Is Among Top Monthly Dividend Stocks to Buy

Shaw’s price-to-earnings (P/E) ratio currently is 17.69, which is below the sector median P/E ratio of 19.89. SJR’s relatively low P/E ratio suggests that the stock is currently undervalued, making right now a favorable time to buy.

Comments from Leadership at Shaw Communications

“Now, more than ever, Canadians and businesses alike, are depending on reliable connectivity services to remain in touch with family, friends, colleagues and customers,” said Bradley Shaw, CEO of Shaw Communications, in a statement. “As we have seen an increase in network traffic, particularly in wireline, I am pleased to confirm that our network performance has been exceptional. It is because of the significant facilities-based investments and strong and capable networks that operators, such as Shaw, can continue to provide these critical wireline and wireless essential services into homes, businesses and communities across our country and quickly adapt to the changing needs of our customers.”

Shaw further reassured investors of his company’s good standing on July 10 when he said, “Under the most difficult and challenging set of circumstances, our network performance was exceptional, and we delivered better than expected results. As the economy begins to reopen, we are confident that our robust broadband and wireless infrastructure will continue to play a vital role and drive our economic recovery.” 

These comments from Bradley Shaw affirm that the company has the capacity to withstand the pandemic’s repercussions and is doing well.

Why dividendinvestor.com believes Shaw Communications Stock is a Buy 

  • Telecommunications is no doubt a safe place to invest during the pandemic because the industry largely has been unaffected throughout this time. If anything, the industry has benefited greatly from the increase in people working from home creating a further need for communication services. 
  • SJR stock is attractive from a valuation perspective. The company’s P/E ratio is relatively low compared to the industry as a whole, showing that the stock is undervalued. 
  • Investors can depend on the monthly dividend that is paid out by SJR. The company has been reliable with its dividend payouts, and was even able to maintain its dividend throughout the economic turmoil of the COVID-19 pandemic. Furthermore, the comments made by leadership at SJR should instill confidence in investors.

Key Risks for Shaw Communications 

  • Ineffective digital growth and diversification strategy: digital services are the top priority for telecom leaders; however generating growth from these services remains a challenge.
  • Security and Privacy: Consumers’ concerns about the use of their online data are continuing to increase. The concern from consumers, coupled with regulators prioritizing data protection, leaves telecoms facing the growing challenge of ensuring that their customers’ data and experiences are safe and secure
  • Failure to navigate evolving disruption scenarios: As trends in technology continuously shift, telecom providers must remain aware of potentially disruptive threats, and ensure that tackling such threats is a priority.

Competitive Analysis

The chart below compares Shaw Communications (SJR) to two of its competitors, Comcast (CMCSA) and Telus (T.TO), in terms of various financial metrics. 

SJR CMCSA T.TO
Current Stock Price $18.38 $42.84 $23.23
Market Cap $9.142 billion  $191.215 billion $30.26 billion
Beta  (5Y Monthly)  0.45 0.98 0.55
P/E Ratio (TTM) 17.69 16.63 17.39
EPS (TTM) 0.07 2.52 1.37
Dividend Frequency  Monthly  Quarterly Quarterly
Dividend Yield  4.85% 2.23% 5.03%

When viewing the financial metrics above, keep in mind that SJR is a solid investment as a steady monthly dividend payer. While some competitors may outshine SJR in other areas, SJR is distinguished by the dividend it pays. SJR is a strong buy for an investor who is looking to add a monthly income stock to one’s portfolio. To learn about other monthly dividend stock suggestions, read the following article: 6 Best Monthly Dividend Stocks to Buy Now.

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