Recent Sell – Rogers Communications Inc

Rogers Communications Inc

Although not common, there are times when dividends growth investors have to sell and exit a position. This post details my Recent Sell – Rogers Communications Inc (RCI.B.TO) (RCI). Rogers is a diversified communications and media company with operations across Canada. It is Canada’s largest provider of wireless voice and data communication services and also one of the leading providers of cable television, high-speed internet and telephony services. The company was founded in 1920 and headquartered in Toronto, Canada.

Reason for Buying

  • initiated the position in Rogers in Feb 2014. The company had just released its quarterly earnings, which were terrible and the market punished it with a drop of 5% in share price. I initiated a position as it was a well known company and I lacked much exposure to the telecom sector. I only owned BCE at the time.
  • The company has been paying dividends since 2000 and has a five year dividend growth rate of 11.7%.
  • The company had been investing in the media business to grow and looking for more avenues with better profitability.

Recent Sell Decision

  • I recently completed a Rogers Communications Inc dividend stock analysis and found that the company is facing intense pressure in most of its business segments. Click here to read the analysis.
  • The revenue is flatlining and earnings are expected to decrease for the next five years at a rate of 2%.
  • Wireless segment, where Rogers has the highest market share is losing its crown to other providers such as BCE and Telus slowly encroaching on Rogers. Threats of fourth national provider, while unlikely, provides more challenges in the space.
  • Cable segment has seen some increase in revenue, but no increase in profit. Besides, the industry is facing issues of cord-cutting by the masses moving to online content.
  • Media segment, where Rogers is investing heavily is less and less profitable each year (see chart below)
  • The company’s latest quarterly results came in where profits fell by 28%.
  • I decided that owning BCE Inc (BCE) and AT&T (T) gives me enough exposure in the telecom sector. I do not need more exposure in the Canadian telecom space; and BCE is a much stronger company with better financials, that can weather the storm facing the telecom sector, in my opinion. Read the BCE Inc dividend stock analysis here.
  • My money is better invested elsewhere.

Rogers Communications Inc Profits

While I believe in the long term prospects of Rogers Communications, I decided not to risk my capital at this time and will wait to see how Rogers turns things around before getting back in. Maybe in a year or two, I will revisit to see where things stand. My overall gain including dividends was approximately 4% in the 8 months holding period.

Full Disclosure: Long BCE, T. My full portfolio is available here.

19 thoughts on “Recent Sell – Rogers Communications Inc

  1. As soon as you feel that you shouldnt own a company its best to just pull the bandaid off so to speak. With declining forecast earnings and further headwinds to actually generate growth I can blame you for wanting to grt out especially if there’s other companies with comparable yields that provide better growth. Thanks for the update.

    • Thats the idea, JC. I’d rather take my money elsewhere instead of speculate in a company who has a tough road ahead. The company also recently went through a change in CEO. The previous CEO took Rogers down the right path and the new one has to prove himself and steer the company in the right direction. For now, I will stay away – I’ll keep an eye on it if I want to return sometime in the future.

      Thanks for stopping by
      R2R

  2. R2R,

    Seems like a sound decision to me. If I was confident that a company I was invested in would be facing declining profitability for a few years or potentially longer I would have to move on. My capital needs to be working at the highest level possible, and a shrinking company isn’t it.

    Best of luck finding a new home for those dollars. 🙂

    Cheers!

    • Thanks for stopping by and the comment, Mantra.
      I hope this was a good decision. Time will tell if I made a mistake. But if the stock rises from here, I will atleast have a consolation that I didnt lost money in the company and just ended up with a minimal gain. Meanwhile, I learned a lot of details about the company that I hadnt uncovered by not being an investor.
      My capital sure needs to be working at its highest potential. New home will be uncovered soon 🙂

      R2R

    • Tawcan,
      Fair enough. Im sure Rogers will turn things around – the only question is whether the company needs to shrink before it gets there. I will be keeping an eye on it. For now, I will stay away and put my capital to work in better companies.

      R2R

  3. R2R — I think its important not to be stuck in a situation where one is trying to hold on for the sake of holding on. Long term holdings need to be great holdings, so if a holding no longer appears to be great, it needs to go. Thanks for sharing and good luck!

    • Hi FerdiS,
      Completely agree with you. Its a question that Ive been thinking about for the last week or two – Do I hold on for the sake of holding on, since I am investing for the long term? Eventually, I realized that I wasnt comfortable enough and decided to sell it. Thanks for the words of wisdom and the thoughts.

      regards
      R2R

  4. R2R,

    Whenever I see a title discussing a stock being sold it catches my attention. Especially from a feloow dividend growth investor. However, it sounds like you put a lot of thought into the decision and took a quick, decisive, action. As JC said, it is best just to end the relationship instead of waiting and hoping the stock price will increase. You can get burnded just as easily in the other direction! Do you have a stock in mind that you are going to purchase? Don’t answer if you think it will spoil a future article.

    I am looking forward to reading about your next move.

    Bert

    • Hi Bert,
      Yeah, Ive been mulling about it for a couple of weeks and decided that the risks did not warrant the reward. I decided to sell out and move on for now. I’ll not spoil the surprise of the next stock I am buying 🙂 Post should be coming up soon. Stay tuned.

      Thanks for stopping by and the input.
      R2R

  5. As you said, it’s not often to read about stock sales in the DGI community but when they occur they usually do for good reason. Personally, I have no interest in the sector Rogers is in but commend you for “reading the tea leaves” and deciding to sell.

    • Hi DivHut,
      Are you not interested in telecom at all? I cant remember your portfolio and will have to take a look. I already own BCE and T in the space and I think there is no point in adding RCI to that space as well. My money is better off elsewhere working to its full potential. Thanks for stopping by.

      cheers
      R2R

        • I hear ya. Investing in tech for dividend growth is hard. The sector isnt mature enough and the track record isnt there. And by the time one company gets its act together, some new upstart is already challenging everything and bringing down the incumbents.

          Thanks for the clarification
          R2R

    • Hi Henry,
      Like you, it took me a while to decide and I think its the right decision. Time will tell if I did well. I have decided where that money is going. Watch for the post tomorrow.

      R2R

  6. Hi R2R,

    It’s ironic how when you have decided to sell Rogers Communication, I have picked up a few shares myself the last couple of weeks. Perhaps, I have made a bad buy!

    I saw the drop in share prices as an opportunity to initiate in a position. Although there hasn’t been much room for growth for Rogers, it is still a strong and stable dividend growth stock. Rogers had also expanded into the sport industry and I see lots of potential there.

    When BCE is marketed at an attractive price, I will purchase some shares as well! I look forward to see what you do with the money.

    • Jeff,
      RCI could possibly return to the good days where they have growing earnings. I dont blame you for picking up shares at these levels. The stock is attractively valued. And the 4.25% yield doesnt hurt. For my portfolio, it didnt make sense as I have enough telecom exposure and BCE covers the same part of the economy….I didnt need another stock in the same country, same sector, same market space etc.
      I will be adding to BCE when it gets attractive again myself. I bought something with the funds already….look forward to that post going online today.

      Thanks for stopping by. Your blog is new to me. I will add it to my reading list.
      R2R

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