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
- I 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.
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.