Loblaw Companies Ltd (TSX:L) released its Q1 results last week and while doing so also announced that it would be increasing its quarterly dividend payments. From payouts of 29.5 cents every quarter to 31.5 cents, Loblaw has hiked its payments by 6.8% and investors will now be earning around 1.9%.
While it may not be a very high-yielding stock for investors to get excited about, it could turn out to be a good long-term hold as the company has being increasing its payments over the years. Since 2014, when dividend payments were 24.5 cents every quarter, payouts have grown by nearly 30%, averaging a compounded annual growth rate of about 5.2%. That’s a decent rate of growth that if it continues, could produce stronger dividend payments in future years. Locking in now will mean a higher payment on your original investment.
At minimum, it’s a much better return than you’d get from putting your money into a savings account with your bank. And with Loblaw, investors will also have the added opportunity of cashing in on gains achieved the by one of the TSX’s top stocks. In five years, Loblaw has seen its share price climb by more than 70%, and if we look at 10 years, that number becomes 130%. Even a price-fixing scandal hasn’t been enough to derail the stock, nor has rising competition from online retailers.
With a big presence across the country and being one of the industry leaders, Loblaw is a good option for investors to hold for the long term.