Supermarkets produce sustainable yields

Article Excerpt

The dividend yields on these supermarket stocks are low compared to others we recommend. However, their long history of dividend hikes secures their Highest rating. LOBLAW COMPANIES LTD. $71 (Toronto symbol L; Conservative Growth Dividend Payer Portfolio, Consum er sector; Shares outstanding: 403.5 million; Market cap: $28.6 billion; Price-to-sales ratio: 0.6; Divd. yield: 1.5%; Dividend Sustainability Rating: Highest; www.loblaw. ca) operates Canada’s largest supermarket chain with over 1,100 stores. In March 2014, the company purchased the Shoppers Drug Mart chain for $12.3 billion in cash and shares. Shoppers operates 1,300 drug stores across Canada. In July 2016, Loblaw raised its quarterly dividend by 4.0%, to $0.26 a share from $0.25. The new annual rate of $1.04 yields 1.5%. The company has increased that payout each year since 2012. Due to competition, Loblaw has now cut prices in its stores. As a result, its sales in the quarter ended October 8, 2016, rose 1.4%, to $14.1 billion from $14.0 billion a year earlier. Disregarding unusual…