Friday, 22 March 2013

BSkyB (BSY)


This is another of my shares originally held in my sipp but sold last year to release the tax-free lump sum and subsequently repurchased in my ISA.

Sky is installed in over 10m homes in the UK and Ireland offering a comprehensive multi-channel choice of movies, news, entertainment, arts and sport. Customers have access to 500 TV and radio channels as well as 20 mb broadband and free evening and weekend calls via Sky Talk.

The business first launched in 1989 and floated on the stock market in 1994 entering the FTSE 100 the following year. The business has grown rapidly and currently has a market cap of over £14bn - more than double the size of, say, Sainsbury or M&S and over 3 times larger than competitor ITV.

As the company has grown, so have profits and dividends for shareholders. In 2004 they paid a dividend of 6p per share, last year it had risen to 25.4p. That an impressive CAGR of 17.4% per year.

Sky recently issued its half year results for the 6 months to end December 2012 and it looks like they are on track for another good year. Here's a link to the interim results. Profits have increased by 8% to £647m and there's also a 20% increase in the interim dividend from 9.2p to 11p. The dividend is covered 2.5x by earnings per share of 28.3p.

Despite the tough economic conditions, Sky has signed up more customers and those customers are spending more money on such services as broadband, Sky Go and use of On Demand.

The share price has now recovered to the sort of levels seen a couple of years back when Murdoch’s News International had to pull out of a proposed takeover bid following the phone hacking scandal at the News of the World.

If the final dividend is increased in line with the interim, this will raise the full year payment to 30p giving a forward yield of 3.4% based on a current share price of 883p. The full year results are due in July.
Bradley Wiggins & Team Sky
As ever, please DYOR (and stay warm...).

No comments:

Post a Comment