North West Company continues to pay investors regular dividends with above-average yields. Its leading position in a niche market continues to spur its earnings. That gives the firm more room to keep raising your payouts.
The company’s niche market involves operates in remote regions across Canada, Alaska, and other areas, which typically face less competition. This diversification helps to mitigate risk and provides a stable revenue stream.
What’s more, the firm’s offerings include essential consumer goods. This makes its business model resilient even in economic downturns. The firm continues to open new stores and expand into new markets.
The stock trades at 16.5 times the company’s forward earnings forecast, a very reasonable valuation when you consider it’s more than kept pace with the S&P500 with a 44.4% return over five years.
NORTH WEST COMPANY (Toronto symbol NWC; www.northwest.ca) sells food and everyday products and services at 227 stores, mainly in northern communities across Canada, as well as in Alaska, the South Pacific and the Caribbean.
North West sells food, and everyday products and services through 227 stores. Those locations are mainly in northern communities across Canada and Alaska. Through your shares, you also tap the company’s operations in remote regions of Hawaii, the wider South Pacific and the Caribbean.
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The company’s food offerings consist of perishable and non-perishable products including groceries, dairy, produce, meat, convenience foods, food service, home meal replacement, health and beauty aids, paper products and cleaning supplies. Its general merchandise assortment is broad, and includes family apparel, housewares, sporting goods, toys, furniture, appliances, home entertainment, snowmobiles, all-terrain vehicles (“ATVs”), boats and outboard motors. The company also offers other everyday products and services such as gasoline, pharmacy and financial services like cheque cashing, ATMs and prepaid card products.
North West owns North Star Air Ltd., a Thunder Bay-based airline. North Star provides cargo and passenger services in the following regions of Canada: northwestern Ontario, northern Manitoba and Nunavut. Its operational hubs are in Pickle Lake, Red Lake, Sioux Lookout and Kapuskasing, Ontario, and Thompson, Manitoba.
North Star lets North West provide faster, more consistent delivery of merchandise to those of its stores in northern Canada that are generally inaccessible by all-weather roads. North Star’s current fleet comprises 18 aircraft, including three Basler BT-67, seven Pilatus PC-12, five ATR 72 and three Dash 8’s.
Blue Chip Stocks: 4.6% revenue growth for North West Company in the latest quarter
In the quarter ended July 31, 2024, North West’s overall sales rose 4.6%, to $646.5 million from $618.1 million a year earlier. Same-store sales rose 4.3% in the quarter compared to last year. Excluding one-time items, earnings in the quarter rose 1.6%, to $40.7 million, or $0.85 a share, from $40.0 million, or $0.84.
The long-term outlook for the company and its investors remains positive. That’s especially so for its operations in the North, where the company holds a dominant market position. The stock trades at a reasonable 16.5 times the projected fiscal 2025 earnings of $3.07 a share.
With the October 2024 payment, North West is raising its quarterly dividend by 2.6%, to $0.40 from $0.39. The shares now yield a solid 3.2% for investors.
North West’s annual payment to shareholders has now risen an average of 3.9% in the past 5 years. The company’s TSI Dividend Sustainability Rating is Above Average.
Recommendation in Dividend Advisor: North West Company is a buy.
