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https://www.adviceforinvestors.com/news/blue-chip-stocks/food-stocks-are-defensive/#gsc.tab=0
Food stocks are defensive
We regularly review 10 food stocks on The Back Page section of our publication. They’re defensive companies that have held up better than the overall stock market. All 10 remain buys for long-term share price gains as well as high or rising dividends.
We regularly review 10 food stocks on The Back Page. They’re defensive. That’s partly because food is a necessity, of course. Consumers need to keep on buying food to replenish their refrigerators, cupboards and freezers. In addition, the big food retailers have generally done a good job of keeping up to date and serving new markets.
Loblaw is doing very well
Consider Toronto-based Key stock Loblaw Co. Ltd. (TSX—L). Since we published our March 18 issue, its share price has advanced by 12.6 per cent. That beats the average decline of 3.2 per cent for each of the 10 food stocks. The advance also gives Loblaw’s shares upwards price momentum. It remains a buy for further long-term share price gains as well as modest, but growing, dividends.
Loblaw operates 2,400 locations. It’s Canada’s largest supermarket chain and drugstore chain since it acquired Shoppers Drug Mart. It operates PC Financial services, Choice Properties REIT and Joe Fresh, among others.
In 2022, Loblaw’s earnings are expected to grow by 14.1 per cent, to $6.39 a share. Based on this estimate, the shares trade at a forward P/E (price-to-earnings) ratio of 18.7 times. In 2023, the company’s earnings are expected to grow by 10.3 per cent, to $7.94 a share. This works out to a better P/E ratio of less than 17 times.
Growing earnings feed rising dividends
Loblaw has used its growing earnings to raise its dividend. In fact, the company has increased its dividend for 11 years in a row. This makes Loblaw what’s known as a ‘dividend aristocrat’.