Thomson Reuters Is Canaccord's Favorite Yield Play In Media

Canaccord Genuity analysts picked up Thomson Reuters Corp TRI in the media sector as a favorite yield play, saying fundamentals are strengthening in both the professional and F&R divisions. They kept a Buy rating and $47 price tag.

The brokerage thinks the dividend growth pace might fall in the short-term. However, analysts are confident its strong dividend and the growth outlook would more than compensate it compared to others in the media sector. Canaccord pointed out that shares traded based on its fundamentals than on the interest rates, which is the case of its coverage on Telco.

In a note to clients, the analysts said, "We expect dividend growth will remain in the ~2% vicinity until the payout ratio falls to 50% and then see sharper growth. We also note that TRI has been aggressively buying back stock, with $1.5B in buybacks targeted for 2016. As we look at TRI's financial outlook, we believe that they remain on track to deliver mid- to high single-digit EBITDA growth in 2017 (8.3%) and beyond, and double-digit EPS growth in 2017."

On the flip side, analysts see Europe as a concern area since revenue dipped 5 percent in the second quarter with not much sign of a recovery.

The stock shed $0.31, or 0.73 percent, to $42.16 at time of writing.