Topic: Dividend Stocks

TORSTAR CORP. $7.00 – Toronto symbol TS.B

TORSTAR CORP. $7.00 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.7 million; Market cap: $557.9 million; Price-to-sales ratio: 0.4; Dividend yield: 7.5%; TSINetwork Rating: Above Average; www- .torstar.com) continues to struggle with falling newspaper ad sales, particularly at The Toronto Star, its flagship paper. Strong competition and unfavourable foreign exchange rates are also hurting profits at wholly owned Harlequin Enterprises, the world’s leading romance novel publisher.

In 2012, Torstar’s revenue fell 4.1%, to $1.49 billion from $1.55 billion in 2011. Earnings fell 52.6%, to $103.2 million, or $1.29 a share, from $217.7 million, or $2.72 a share. If you disregard writedowns and other unusual items, earnings per share would have declined 25.0%, to $1.35 from $1.80.

To improve its profitability, Torstar continues to cut jobs and sell surplus real estate. Since 2010, these moves have cut its annual costs by $34.4 million. In 2013, annual savings should rise to $50.0 million.

Lower costs should let Torstar keep paying quarterly dividends of $0.13125 a share, for an annualized yield of 7.5%. In 2012, dividend payments totaled $41.1 million.

Torstar also plans to start charging users to access its websites. Combined with its cost cuts, these moves should should stabilize its 2013 earnings at $1.35 a share. The stock trades at a low 5.2 times that forecast.

Torstar is still a buy.

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