Best Canadian Grocery Stocks: Not What You Would Expect

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 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.

Top 3 Dividend Grocery Stocks

Alimentation Couche-Tard 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

ATD.B - 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.

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.

Key Investment Data

  • Ticker: TSE:ATD.B
  • Sector: Consumer Defensive
  • Industry: Grocery Stores
  • Market Cap: 49.93B
  • P/E: 15.15
  • Dividend Yield: 0.95%
  • Payout Ratio (TTM): 11.40%

2. Metro

MRU - Metro Metro 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.

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.

Key Investment Data

  • Ticker: TSE:MRU
  • Sector: Consumer Defensive
  • Industry: Grocery Stores
  • Market Cap: 15.13B
  • P/E: 18.58
  • Dividend Yield: 1.62%
  • Payout Ratio (TTM): 21.80%

3. Empire Co

EMP.A - Empire Co Empire Company is a leading Canadian food retailing and real estate company. Empire’s reportable segments are food retailing (Sobeys Inc.) and investment and other operations. Sobeys serves millions of Canadians with more than 1,500 retail stores and 350 retail fuel locations, operating in all ten provinces and in more than 900 communities across Canada.

Its portfolio of properties consists of high quality grocery and drug store anchored shopping centers, freestanding stores, and mixed use developments primarily in Canada’s major urban and suburban markets; The company’s Project Sunrise, a three year transformation program is intended to simplify the organizational structure and reduce costs, and subsequently result in at least $500 million in annualized benefits by 2020.

With more than a century’s experience under its belt, Empire Company has built a strong reputation of Canada’s most trusted grocer. Customers prefer Empire Company for its fresh and quality products. The company along with an alliance with Ocado will launch a central pick up, home delivery online grocery shopping business by mid-2020.

Key Investment Data

  • Ticker: TSE:EMP.A
  • Sector: Consumer Defensive
  • Industry: Grocery Stores
  • Market Cap: 9.96B
  • P/E: 14.33
  • Dividend Yield: 1.61%
  • Payout Ratio (TTM): 20.70%

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