Loblaw Companies (TSE:L) Is Increasing Its Dividend To CA$0.36
Loblaw Companies Limited's (TSE:L) dividend will be increasing to CA$0.36 on 30th of December. This makes the dividend yield 1.5%, which is above the industry average.
See our latest analysis for Loblaw Companies
Loblaw Companies' Earnings Easily Cover the Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Loblaw Companies was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to rise by 2.3% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.
Loblaw Companies Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2011, the first annual payment was CA$0.84, compared to the most recent full-year payment of CA$1.46. This means that it has been growing its distributions at 5.7% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Loblaw Companies has impressed us by growing EPS at 16% per year over the past five years. Loblaw Companies definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Loblaw Companies Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Loblaw Companies is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Loblaw Companies that investors should know about before committing capital to this stock. We have also put together a list of global stocks with a solid dividend.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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