Selecting a good investment that can provide both growth prospects as well as dividends is a difficult task that many investors struggle with. Typically, companies cater to one or the other but rarely do both.
Fortunately, there are well-established companies that can provide value to both growth and dividend-seeking investors, and Shaw Communications Inc. (TSX: SJR.B)(NYSE: SJR) is one such company.
Shaw currently trades at $24.26. Year-to-date, the stock is relatively flat in terms of growth, registering just shy of a 1% increase in value. Over the past six months Shaw is up by 2.5%, and long-term investors will note that the stock is up 19% in the past five years.
Investing in Shaw for growth
The stock has appreciated nearly 4% each year for the past five years, which, while adequate, is hardly the definition of a growth-fueled stock. Putting the stock price aside, the real growth prospects over the next few years stem from the changes the company is making behind the scenes to expand product offerings in new areas.
Earlier this year Shaw sold off company’s media subsidiary to Corus Entertainment Inc. in a cash and stock deal that was worth approximately $2.65 billion.
This deal was significant for two reasons. Firstly, this brought the company closer to becoming a pure-play communications company. Secondly, Shaw used the proceeds from that deal to acquire Wind Mobile Corp.
Wind is a hugely popular carrier with a tendency to attract customers from the other Big Three carriers collectively known as “RoBelUs.” Wind has a no-frills, no-nonsense approach to billing, and it has price points that are lower than other carriers. This foray into the wireless sector could prove to be a lucrative revenue stream for Shaw over the long term.
The weak point for the carrier was coverage, which Shaw has stated will be a point of significant investment in the future. Investors thinking about Shaw as a growth stock should consider this point as Wind had coverage only in Ontario and in some parts of Alberta and B.C., so it will take some time for this to be built out.
Shaw as a dividend stock
Shaw’s dividend is, in a word, impressive. Shaw pays out a monthly dividend in the amount of $0.10 per share. Given the current stock price, this gives the company a yield of approximately 4.88%, which is more than what any of the Big Three provide to investors.
Even more impressive is that that the company has steadily raised this dividend over the years, a trend that is likely to continue as the company expands into the wireless sector.
In my opinion, Shaw is a great investment for those investors looking at long-term growth and a well-paying dividend. The monthly dividends can fuel further investments into the company, which in turn will result in further growth.
