The stock market has been hot lately so it has been difficult to find an attractive stock to purchase. Part of my plan to achieve financial independence is through purchasing dividend stocks. I simply like the idea of owning part of the company and having my money working hard for me while I’m busy with everyday life.
I recently purchased 111 shares of Corus Entertainment Inc (CJR.B).
Our portfolio is already heavy in the financial sector, so I would like to diversify by adding new positions in other sectors. I already own a number of telecommunication companies so owning Corus Entertainment Inc. means I can branch out a little more in the communication sector.
Corus Entertainment Inc. is a Canadian communication and entertainment company. Their key business activities are operation of radio stations, specialty television networks, pay television services and television stations, and production and distribution of films and television programs, merchandise licensing, publishing and animation software. Some of the more recognizable Corus brands include Carton Network Canada, HBO Canada, Classic Rock 101 in Vancouver, and 107.2 The Edge in Toronto.
The stock took a bit of a beating after the July 10th quarterly results showed that the earning was a little lower than what Wall Street expected. Having said that, revenues were up by 14% for the quarter and the earnings per share were up 20% in the quarter. I believe the company is trending in the right direction and the little dip in stock price created a good entry point for me.
Corus has an average Price Earning (PE) ratio of 14.7 and an attractive PEG ratio (P/E divided by growth) of 1.3. A low PEG ratio means the stock has good future growth potential. What I really liked about Corus is the 11 years of continued dividend increase, making it one of the Canadian Dividend All Stars. Corus has a 5 year dividend growth rate of 12.39%. The stock pays a monthly dividend of $0.0908 which corresponds to a 4.5% yield.
Owning a stock always has its inherent risk and owning Corus is no exception. One area of concern is the increasing payout ratio. The low earning per share result from the last quarter drove the payout ratio up. Currently the payout ratio is at 70%, much higher than the 5 year average of 51%. The other concern is that more and more people are cancelling their cable subscription and turning to streaming services like Netflix. I will need to continue monitor future quarterly results whether this trend will impact Corus’ television business or not.
This purchase adds additionally $120.95 in our annual dividend.