Broadband companies face credit pressure as dividends grow faster than cash flow

TORONTO — Canada’s broadband communications companies are facing growing pressure to raise dividends, as a prolonged period of very low interest rates is causing investors to seek refuge from declining bond yields and to move into higher-yielding assets, according to a new report from Moody’s Investors Service.“Share prices for dividend-paying broadband companies in Canada have become more sensitive to dividend yields, similarly to bonds, and less sensitive to earnings,” said Bill Wolfe, a senior vice-president at Moody’s Canada Inc., in a news release. “But with dividends growing faster than EBITDA and other spending remaining constant, after-dividend cash flow is eroding,...