We maintain an ongoing list of all monthly dividend payers — and in this article we continue a 5-part series on the best current buys among these stocks, explains Bob Ciura, contributing editor with Sure Dividend.
High-yielding monthly dividend payers have a unique mix of characteristics that make them especially suitable for investors seeking current income.
Our current top 5 monthly dividend stocks were selected based on their projected total annual returns over the next five years, but also based on a qualitative assessment of business model strength, future growth potential, and dividend sustainability.
Shaw Communications (SJR) — our #3 monthly dividend stock — was founded in 1966 as the Capital Cable Television Company. It has since grown to become Western Canada’s leading content and network provider, catering to both consumers and businesses. The company produces about $4 billion USD in annual revenue.
Shaw earns a high ranking among monthly dividend stocks, because it possesses a combination of a recession-resistant business model, growth potential, a high dividend yield, and a sustainable dividend payout.
Shaw reported fiscal 2021 first-quarter results in late January. Consolidated revenue decreased by 0.9% to $1.37 billion, while consolidated net income increased 0.6% and adjusted EBITDA increased 3.2% year-over-year.
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Not surprisingly, the company’s wireless business fueled its growth last quarter with approximately 101,000 customer additions, including 87,300 postpaid net additions. This led to 10% revenue growth in the wireless segment. The company also issued guidance for the upcoming year, which calls for continued growth in adjusted EBITDA and free cash flow.
At the end of fiscal 2020, net debt leverage stood at 2.3x compared to its target leverage range of 2.5x to 3.0x. The company is now stating that they expect to deliver adjusted EBITDA growth in fiscal 2021, along with free cash flow of approximately C$800 million, which supports current dividend levels.
Shaw currently pays an annualized dividend payout of $1.182 per share in Canadian dollars; in U.S. dollars, the stock has a current annual dividend payout of ~$0.93 per share. Shaw has a current yield of 5.3%.
Shaw also has a sustainable dividend payout. Shaw has a defensive business model which should continue to generate sufficient cash flow to pay its dividend, even in a recession, as consumers will still use their wireless and cable service.