Shaw Communications (TSX:SJR.B) Is a Great Investment

Shaw Communications (TSX:SJR.B)(NYSE:SJR) has always been viewed as a great investment. That view appears to be more true now than ever before.

| More on:

Buying into one or more of Canada’s telecoms is always a great investment. There are plenty of reasons for that view, ranging from offering handsome dividends to their stable and defensive business models. But which of Canada’s telecoms should you invest in?

Today, let’s take a look at why Shaw Communications (TSX:SJR.B)(NYSE:SJR) could be a great investment for your portfolio.

All about Shaw

Shaw is not the largest or most renowned of Canada’s telecoms, but it does have significant potential. Like its larger peers, Shaw offers the typical slew of subscription services. This includes wireline, TV, internet, and, most importantly, wireless segments.

That wireless segment is steadily growing in importance. A little over a decade ago, wireless devices were primarily seen as communications devices. Today, wireless devices are seen as digital companions for our daily lives. In fact, few people may realize the number of standalone devices that smartphones have eliminated in the past few years.

That was part of the rationale behind Shaw jettisoning its media segment to purchase the defunct Wind Mobile network. The company has invested heavily in growing that network since then, and Shaw has established itself as the fourth-largest carrier in Canada.

The move also established Shaw as an alternative to the traditional big three telecoms. Shaw marketed itself as that true alternative with generous data allowances and contract-free plans that lured in customers.

Is Shaw still a great investment?

There’s another interesting reason why Shaw is a great investment. The telecom made news recently when it was announced that Rogers Communications (TSX:RCI.B)(NYSE:RCI) made a $26 billion offer to buy Shaw.

Part of that offer included Rogers purchasing all issued and outstanding Class A and Class B shares at a price of $40.50. This represents a solid gain over both the pre-announcement and current price. As of the time of writing, Shaw trades at just over $35 per share.

What does that mean for investors? There are several key points for current and prospective investors to make a note of.

First, as appetizing as the deal sounds, it still needs regulatory approval. Ironically, approval of this deal translates into a complete reversal of the prior decision to invite more competition into Canada’s wireless market. In other words, there are many who see that there’s a chance that this deal won’t complete as planned.

Second, if we assume that the deal does go through, existing shareholders will get a premium price for their shares. That price is well above the current stock price, and let’s keep in mind that Shaw still pays a monthly dividend. In other words, until that final decision on the Rogers deal (which could be a year or longer out still) is made, investors can still scoop Shaw at a discounted rate and benefit from its dividend.

The bottom line

Shaw reported earnings for the latest fiscal earlier this month. In that most recent quarter, Shaw reported revenue of $1.387 billion. This represents an increase of $167 million over the same period last year. EBITDA for the quarter came in at $637 million, which was fueled by strong wireless revenue.

Overall, the wireless segment saw revenues surge to $218 million, reflecting an 8.5% increase. The company added 82,300 subscribers to the segment during the quarter. The results paint a clear picture that Shaw continues to grow, generate revenue, and provide investors with handsome gains.

In my opinion, Shaw remains a great investment option for any portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou owns shares of Shaw Communications. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV.

More on Dividend Stocks

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy for its Dividend Yield?

Nutrien is down more than 50% form the 2022 highs. Is NTR stock now oversold?

Read more »

golden sunset in crude oil refinery with pipeline system
Dividend Stocks

Best Stock to Buy Right Now: Enbridge vs TC Energy?

Enbridge and TC Energy rebounded nicely over the past year. Are more gains on the way?

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

2 Utility Stocks That Are Smart Buys for Canadians in November

Are you looking for some of the smart buys to consider in November? These utility stocks offer growth and a…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is Power Corporation of Canada Stock a Buy for its 5% Dividend Yield?

Is Power Corporation of Canada (TSX:POW) stock's 5% dividend yield worth it? Discover why this resilient stock could be a…

Read more »

hand stacks coins
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These three dividend stocks are ideal for strengthening your portfolio and earning a stable passive income.

Read more »

man touches brain to show a good idea
Dividend Stocks

3 No-Brainer REIT Stocks to Buy Right Now for Less Than $200

REITs have long been touted as some of the best dividend stocks out there if you want recurring, strong income.…

Read more »