Shares of Loblaw Companies Limited (TSX:L) are flat this year, which is still better than the 8% decline the TSX's been on year to date. The grocery stock's been proven to be a stable buy this year as even during the market crash in March, Loblaw only saw its share price briefly dip below 10% -- the TSX, meanwhile, fell more than 30% from where it was at the start of the year.
Admittedly, there's not a whole lot of reason to be all that excited about Loblaw.
Its profit margins are normally not much higher than 2% and it's not exactly a high-growth stock, either. And with a dividend yield of around 1.9%, investors can easily find higher-yielding dividend stocks out in the markets.
Loblaw is currently trading at around 21 times earnings and about two times its book value. It's not a terribly cheap stock, its dividend is underwhelming, and the returns are generally not that strong, even over the long term; in five years, shares of Loblaw are up 29% -- averaging a compounded growth rate of 5.2%.
Unless safety is of the utmost importance to you, Loblaw probably isn't the stock for you. Although it's not an expensive buy, this is most suitable for investors who are looking for modest, long-term returns or who want stability, especially amid the COVID-19 pandemic.
The company will release its second-quarter results on July 23. In the first quarter, Loblaw benefited from panic buying which helped the company achieve year-over-year sales growth of 10.7%.
