December 10, 2018

Loblaw (L)

Loblaw (L) is a name that is familiar to the vast majority of Canadians since they see it on their weekly grocery shopping trip.  They are by far Canada’s largest food distributor.  They also have substantial market share in the fields of financial products/services, over-the-counter drugstore sales, and general merchandise.  They are a massive employer in the Canadian market with 136,000 full- and part-time employees across Canada.  Loblaw is “Committed to providing Canadians with a one-step destination in meeting their food and household needs.”  They have expanded from their purely food-distribution beginnings, into original product-line creation including such noteworthy brands as President’s Choice (PC), No Name, and Joe Fresh.  Loblaw (L) management has pursued a defining strategy based on three main focuses: Simplify, Innovate, and Grow.  Since Loblaw is a branch of the large foods-conglomerate George Weston (WN), it is committed to the same investor-friendly strategy of returning a generous amount of overall profits to shareholders.  Throughout its long and storied history Loblaw has been very active in supporting charity initiatives as diverse as diabetes treatments and helping impoverished children afford glasses

LoblawsLoblaw (L) has a storied history that dates back to the close of World War One.  In 1919 J. Milton Cork and Theodore Pringle Loblaw (aka “The Merchant Prince”) opened a grocery store in Toronto called Loblaw Groceterias.  They were one of the first locations to use self-serve shopping to achieve lower overhead costs and consequently cut prices for shoppers.  Within the next decade the original two owners were joined by another Toronto businessman named Charles Shields and expanded to over 70 locations.  Before World War Two, Loblaw (L) had grown and also vertically integrated.  It now had its own electric tram railway, and the infrastructure needed to produce vast quantities of food to sell in its stores.  In 1947 Garfield Weston (the son of George Weston) the President of George Weston Limited (WN) bought out co-founder J. Miltion Cork, and soon after acquired a controlling interest in Loblaw Groceterias Co. Limited.  Loblaw soon began its now storied history of developing original brands that boosted their products image.  In 1998 they began to expand into the financial service portion of their business, offering stiff competition to big banks, and ultimate convenience to customers.

Loblaw (L) offers investors much the same package as its parent company George Weston does.  They are a mature company that will likely pay a substantial dividend for the foreseeable future; however, they are in the industry of food retail and distribution which has razor-thin margins of profit.  I believe that it offers fine exposure to the Canadian food and retail market, and a decent dividend, but it is not a stock I would highlight.  It is currently trading at around $36 per share.  Loblaw has a huge market capitalization of over $10 billion dollars.  Its current price-to-earnings ratio is a respectable 14.25, and its annual dividend of $0.84 gives it a yield of 2.3%.

 

 

Loblaw (L) Dividend Stock Graph:

TSE L

Loblaw (L) Dividend Stock Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
LLoblaw Cos Ltd41.022.0534.360.410437400

 

 

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  1. […] is now the third largest company in the Canadian food industry (one of his biggest competitor being Loblaw (L)).  It is now the biggest grocer in both Quebec and Ontario and has over 35% market share between […]

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