What To Know Before Buying Loblaw Companies Limited (TSE:L) For Its Dividend
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the past 10 years Loblaw Companies Limited (TSX:L) has returned an average of 2.00% per year to investors in the form of dividend payouts. Does Loblaw Companies tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Loblaw Companies
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Will it have the ability to keep paying its dividends going forward?
How well does Loblaw Companies fit our criteria?
The current trailing twelve-month payout ratio for the stock is 25.72%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 23.76%, leading to a dividend yield of 1.82%. Moreover, EPS is forecasted to fall to CA$2.75 in the upcoming year. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. L has increased its DPS from CA$0.84 to CA$1.08 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Relative to peers, Loblaw Companies has a yield of 1.62%, which is high for Consumer Retailing stocks but still below the low risk savings rate.
Next Steps:
Taking into account the dividend metrics, Loblaw Companies ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for L’s future growth? Take a look at our free research report of analyst consensus for L’s outlook.
Valuation: What is L worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether L is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
