Best Canadian Grocery Stocks

Food is one thing we all need. It’s one of Maslow’s hierarchy of needs and is in fact one of the basic needs we must regularly satisfy. These days, most people get food at the grocery store or the restaurant. Being that eating out all the time is financially prohibitive, grocery stores are our primary source of food.

With that said, the grocery business is highly competitive and close to being an oligopoly. New competition often comes in the form of organic and natural food grocery stores or specialty stores providing international culinary items.

Canadian Grocery Stocks

The categorization of company’s sector or industry is managed by the Global Industry Classification Standard (GICS) and it chose to include Alimentation Couche-Tard Inc. in the grocery industry. When you think about it, it makes sense considering all major grocers also have diversified their business into the fuel and pharmacy businesses.

As such, the list of dividend grocery stocks to chose from in Canada is outlined below sorted by market capitalization.

Dividend Adjusted Chart by StockRover.

Top 3 Dividend Grocery Stocks

Alimentation Couche-Tard Inc. is the only stock with international exposure and it makes it my #1 pick in this industry as pure dividend growth stock and the company excel at integrating acquired businesses.

#1 – Alimentation Couche-Tard Inc.

Alimentation Couche-Tard is one of the largest Canadian companies and the owner of several Canadian convenience stores. The company also supplies road transportation fuel to approximately 1,300 locations in the U.S. and offers stationary energy and aviation fuel. Couche-Tard caters to more than 9 million global customers daily, offering them merchandise and services (55% of 2018 revenues), motor fuel (43%) and other (2%). As a leading independent convenience store operator, Couche-Tard owns a network of nearly 10,000 convenience stores in 48 states in the U.S., ten provinces in Canada, as well as other countries. It operates more than 16,000 stores worldwide. By geography, the US is its largest market accounting for 67% of 2018 revenues, followed by Europe (20%) and Canada (13%). The company operates through Couche-Tard and Mac’s brands in Canada and Circle K globally. With nearly four decades of experience, Couche-Tard has adapted to the changing customer habits and preferences and has a sound track record of successful acquisitions over the last decade.

Investment Data

#1 – Metro

MetroMetro is a leading food and pharmaceutical company having operations in Quebec and Ontario. The company is one of the largest food retailers in Canada. The company operates through more than 600 food stores operating under the banners Metro, Metro Plus, Super C, Food Basics and Adonis. Its drug business is conducted through 650 drugstores and pharmacies operating under the banners Jean Coutu, Brunet, Metro Pharmacy and Drug Basics. Its two business segments, food operations and pharmaceutical operations are combined into one reportable operating segment. Metro has developed a successful market segmentation strategy with its different grocery banners catering to three different market segments. For example, Metro, Super C and Adonis all target unique markets and customers. Metro and Metro Plus are leading supermarket chains in Quebec and Ontario. Metro’s largest acquisition of Jean Coutu group that has resulted in the creation of a $16-billion retail leader.

Investment Data

#1 – Loblaw

L - LoblawLoblaw Companies is a leading food and pharmacy company in Canada. It ranks amongst Canada’s largest retail companies. Its brands such as President's Choice, Life Brand, and No Name are three of Canada’s top 10 consumer brands. The company operates through a network of corporate and independent stores across the country and 90% of Canadians live within 10 kilometres of these locations. It also runs pharmacies in more than 1,300 Shoppers Drug Mart stores. The company has become a popular household name in Canada, given the fact that there are one billion visits each year to Loblaw stores. Loblaw operates through two operating segments namely Retail accounting for 98% of revenues, (consisting of retail food and drug stores, in-store pharmacies and apparel and general merchandise) and Financial services (credit card services, insurance brokerage services, deposit taking services etc). Food retail is the larger business accounting for over 70% of total retail revenues while drug retail constitutes the remaining.

Investment Data

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.