LOBLAW COMPANIES $70.28

LOBLAW COMPANIES $70.28 (Toronto symbol L; Shares outstanding: 410.2 million; Market cap: $28.3 billion; TSINetwork Rating: Above Average; Dividend yield: 1.5%; www.loblaw.ca) currently operates over 1,100 supermarkets and 1,300 Shopper Drug Mart pharmacies across Canada. In the three months ended March 26, 2016, Loblaw earned $338 million, or $0.82 a share. That’s up 12.3% from $301 million, or $0.72, a year earlier. Sales rose 4.8%, to $13.9 billion from $13.6 billion. Excluding gas station revenue, same-store sales rose 2.6% at Loblaw. They rose 6.3% at Shoppers Drug Mart. The company now plans to spend $1 billion to open 50 new locations and renovate 150 stores. Choice Properties REIT (Toronto symbol CHP.UN) will contribute an additional $300 million to the construction projects. Loblaw owns 83.0% of the REIT, which gets 91% of its rental revenue from its supermarkets and drug stores. Loblaw also continues to invest in its e-commerce operations. This includes expanding its click-and-collect program. The service lets customers order groceries online and pick them up at a nearby store. Better stores and customer service should increase repeat visits and help the company differentiate itself from discount grocery sellers such as Wal-Mart and Costco. Loblaw is a safety-conscious buy.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

Value Stocks

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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