Over the past five years, few companies have outperformed Canada-based Dollarama Inc. (TSX:DOL). Having returned more than 400% to shareholders over this time frame, Dollarama is a company many investors look to for capital appreciation and growth, and have been richly rewarded for doing so.
With a minuscule dividend yield of only 0.3% (or $0.11 per quarter on a share price of more than $160 per share), investors looking for a higher dividend yield will likely be forced to look elsewhere; while Dollarama's management team has indeed raised its dividend each year since 2011, the reality is the vast majority of Dollarama's earnings are reinvested into a growth business model which has continued to produce stellar returns over time.
Defensive investors looking to insulate a portion of their portfolio from a potential correction to cyclical and higher-risk stocks will continue to flock to Dollarama, a company serving a clientele which is less prone to experiencing a drastic correction and may in fact produce better results in the event of a market correction as buyers shift their focus toward lower cost options at the local dollar store.
With analysts expecting solid double-digit growth numbers in early December, now may be a solid time to add a position as an early Christmas present.
As a way of generating a small amount of income (hey, Dollarama shares are still better than most savings accounts) while taking advantage of an excellent growth model, Dollarama is an intriguing option among a host of other higher-yield, lower-total-return stocks out there.
Invest wisely, my friends.
