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With a recent 18% increase, Shaw Communications Inc.’s (SJR) dividend is now roughly 60% of its estimated free cash flow, with a yield of approximately 2.8% – the highest among its cable peers, according to UBS analyst Jeffrey Fan. He thinks another high-single digit dividend boost from the current annual level of C$1.32 per share is likely in the next 12 months, assuming Shaw’s payout ratio remains consistent.

Nonetheless, Mr. Fan has a “neutral” rating and C$50 target price on the stock, telling clients “the shares are fully valued relative to its peers.”

Meanwhile, RBC Dominion Securities analyst Jonathan Allen boosted his target to C$55 per share from C$51 and has an “outperform” rating on Shaw.

He was surprised with the dividend increase given Shaw’s 67% hike last fall and 12% more in June 2007. If the company’s capital expenditures for 2008 come in at the low end of its C$640 to C$670-million preliminary guidance, Mr. Allen thinks another 10% dividend hike next year could be in the cards – or more if results exceed expectations.

Source: Shaw Communications' Dividend Expected To Rise Even Further