Thomson Reuters shares could reach C$68 in a year or two, says Fool

It is among the top five Canadian companies with the longest history of paying growing dividends and is proud of raising its dividends for 22 years in a row.

“Financially, the company seems to be focused on creating free cash flow, balancing investing in the business and returning capital to shareholders while maintaining an investment-grade rating. Currently, it sports a S&P credit rating of BBB+,” Fool writer Kay Ng said.

“Heading into 2015 and 2016, Thomson Reuters is focusing on organic revenue growth. It has a clear, customer-focused growth strategy, including investing in go-to-market capabilities via sales training, retention, and development. Thomson Reuters expects 2015 to mark its first year of organic growth since 2011.

“With Thomson Reuters’ focus on free cash flow, track record of growing dividends, and a payout ratio at 56%, its dividend looks safe. I also expect it to increase the dividend in accordance with the company’s organic growth.”

What can investors expect in the future? “With a sustainable payout ratio, Thomson Reuters’ 3.2% dividend appears to be safe. After the company completes the remaining platform migration, the firm should experience more accelerated growth.

“If the organic growth described by the company materializes, we could see the price reaching [C]$68 level in the next year or two, as well as a faster growing dividend. From its current price of [C]$52, this would be a gain of 30.8%. With the dividend, investors could see an estimated total return of 34%.” ■