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Jan 18 2015

My Latest Buy: CTCM

stock_buy
My first buy of the year!! I have had my eye on this stock for the past several months, ever since I used Google Finance’s stock screener to hunt for stocks to add to my watch list. A 25 year old company, CTC Media is the fourth largest television network in Russia, plus it owns a network in Kazakhstan and a TV channel in Moldava. With an EPS of $0.86, the company is profitable, and its P/E ratio of 5.42 currently makes CTCM a bargain.

In the past year, the Russian economy has taken a serious hit due to the sharply reduced oil prices and the financial sanctions by Western nations in response to Russia’s annexation (some would call it theft) of the Crimean peninsula and low-level war against Ukraine. Whenever any country’s economy falls into a recession, investors have an easier time finding quality stocks at discount prices. In the case of CTC Media, their stock price has dropped sharply, with a 52-week high of $13.36 and a 52-week low of $4.25.

Taking advantage of a brief dip in the stock price, I picked up 100 shares of CTCM at $4.55 per share. With a quarterly dividend of 17.5 cents per share, the current dividend yield is 15.4%. That will be nice, IF the dividend doesn’t get cut sometime early this year . With a dividend ratio of 19.8%, the dividend should be relatively safe, but I have seen stocks with better dividend ratios cut their dividends, so I have no illusions about what may happen. It’s a risky stock, which is why I’m only buying 100 shares for now. CTCM’s annual earnings release is scheduled for 3/2/15, so I will wait and see how things play out in Q1 and Q2 before I buy more of CTCM.

However, even if the dividend gets severely cut or eliminated, my buy price of $4.55/share should make CTCM a good capital gains play when the Russian economy recovers and the stock price returns to its pre-recession levels.

It will be interesting seeing how this new position performs, as I have some unanswered questions about it, such as:
• Will the current dividend be maintained, cut, or eliminated?
• Will my stock ownership be affected by new Russian laws limiting foreign ownership of domestic businesses?
• How much more will the stock’s price drop as the Russian recession deepens?
• How will the severe drop in the ruble affect the stock price and dividend?

All interesting questions certainly, and I will have to wait and see what happens as the new year unfolds.

Image Credits: PublicDomainPictures (shopper, money), (pixabay.com); NYSE logo © New York Stock Exchange

5 comments

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  1. DivGuy

    I might have read too quickly, but I didn’t see the dividend growth rate?

    Never heard of this company before. Seems like a good timing indeed. Keep us updated on it!

  2. Dividend Quest

    Thanks for dropping in DivGuy. Sorry about being late approving your comment and responding. I’ve been sick and haven’t touched my PC for the past few days. To answer your question about CTCM’s dividend growth rate, check out their site’s dividend information page. The dividend seems to be somewhat volatile, so that could be a problem if you’re seeking a dividend that’s steady or steadily growing.

    1. DivGuy

      Thank you for taking time to reply! Hope you’re back on your feet now!

  3. DivHut

    Thanks for sharing your recent buy with us. Another company that I never heard of. This is why I love reading other dividend blogs. Not sure I would invest in this company for my long term dividend portfolio but it does show some pretty good numbers.

  4. Dividend Quest

    Thanks for dropping in DivHut. Because CTCM is a foreign company (Russian no less), there’s certainly a sense of unease about the level of risk, plus the Russian economy’s slide into recession this year serves to reenforce that unease. Yes, the numbers do look good. I checked the company’s most recent balance sheet, and I was impressed by how little debt it has (zero long term debt) and its current asset/liabilities ratio is better than 2:1, which is another good indicator. Ad revenue may suffer a bit this year, but I think CTCM should be able to endure the recession.

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