Monday, 7 May 2012

Rogers Communication Position

Today I picked up some shares of Rogers Communications. During the first quarter, the company announced the acquisition of Saskatchewan Communications Network (subject to CRTC approval) and an increase of 11% in dividends. However, Rogers has been effected by a highly competitive environment where it not only competes with the other "Big Three" telecoms, Telus and BCE, but new entrants like Wind are offering consumers lower prices. The industry is also "maturing" meaning that growth will be hard to find and will slow down dramatically.  

In order to overcome these obstacles, Rogers (along with the other two large telecoms) are branching out into other areas to try and pick up the slack of the traditional businesses of cable, internet and phone. Along with being the major player in the wireless area (Rogers also owns Fido), Rogers has media assets in the form of Citytv, Sportsnet and of course, the joint venture with BCE to have a controlling stake of MLSE.

Now I own shares in two out of the three major telecoms in the country. While Rogers and Bell battle it out here in Ontario and the rest of Eastern Canada, Telus has had quite the grip on the West and you can bet that I'll jump on the final member of the Big Three when an opportunity presents itself.

You may be wondering why I would invest in Rogers and Bell instead of just pick one. I fell that all the telecoms  have their strengths and weaknesses and it would be difficult to determine who would have the upper hand in the future. So instead of picking one, I'll choose all of them. I'm fairly confident in all of these companies and would be happy to have all of them in my portfolio. The same goes for the Big Five banks (TD, CIBC, RBC, Scotiabank, and BMO). So there may be some redundancy which is bad in terms of diversification, but I'm okay with that because these companies are tried and true blue-chips that consistently raise dividends while keeping the payout ratio under control.

Unfortunately, now I'm officially out of gas, at least until I start taking some more shifts at work so I can build up some funds. On the upside, if I see a deal that I can't pass up, I can come up with the capital by closing my positions in some ETFs which I wanted to do since the beginning of the year. Now if only I could reach that magical $2500 mark...

-the Paperboy

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