Any time a company's dividend increases to double digit levels, investors reasonably get concerned. After all, any yield over and above the 4-5% level gets into yields reserved for junk bonds and highly speculative investments; a yield, then, of more than 12% should make an investor's eyes water.
That said, one Canadian media & entertainment company Corus Entertainment Inc. (TSX:CJR.B) has maintained its $1.14 annual distribution despite declining revenues and earnings by growing its cash flow, providing income-hungry investors with the opportunity to pick up a double-digit yield for at least the next 12 months.
Corus' management team has stated its commitment to maintaining its dividend in the face of adversity, a move which can be analyzed as a bold move, one which reflects the fact the company believes it will be able to continue to grow cash flow moving forward, or a silly one, in that Corus may be forced to eventually cut its dividend anyway, meaning the company is merely delaying the inevitable.
Whatever the case, Corus has a strong management team with what appears to be an all-out focus on cash flow generation, an asset I believe to be very valuable, even if the market doesn't think so. Corus is likely to face the fire in its upcoming earnings releases, so I expect the company to pull out all the stops to generate growth wherever possible in the coming months.
Invest wisely, my friends.
