Shaw Communications (TSX:SJR.B) may not be stock to jump into at the moment, but it’s definitely one to hold onto, says Andrew Pyle, director of wealth management at Scotia Wealth, who argues the telecom company’s dividend is worth the price of admission.
With interest rates climbing higher over the past year, Canada’s big telcos have taken a hit, as investors looking for a safe spot to squirrel away some of their savings start to look more favourably on the bond market. So far in 2018, share prices for BCE, Rogers, Telus and Shaw are all down, with Shaw having been hit the hardest — currently, SJR is down seven per cent on the year.
The company is in the midst of some significant restructuring, as earlier this year, management approved severance packages for 3,300 employees, representing one-quarter of the company’s workforce. At the same time, Shaw is investing heavily in its wireless network, while its discount offering, Freedom Mobile, has seen strong subscription numbers and penetration into the valued Greater Toronto Area, causing the other three telcos to take notice.
In April, Shaw’s share price shot up on news that Freedom had added 93,000 new contract customers for the quarter ended February 28, effectively twice the amount estimated by analysts.
“We like the company,” says Pyle, in conversation with BNN Bloomberg. “We’ve seen a nice little bounce in the stock. The entire telco space was challenged coming into this year. I would hold the stock, I wouldn’t be adding more to it perhaps currently.”
“The dividend yield in the stock is very, very attractive and I think the company itself has shown investors that it can turn things around and perform in the space,” says Pyle.
Recently, Shaw announced its first technical trials of 5G, the next generation of wireless communication, which involves faster internet and mobile device connectivity and promises to usher in a new digital age.
“5G is set to completely transform the industry with faster wireless speeds that will help usher in the next industrial revolution and enable future technologies that we can only dream of today,” said Zoran Stakic, Shaw’s chief operating and technology officer.