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Loblaw Companies' (TSE:L) Dividend Will Be Increased To CA$0.5643

Simply Wall St · 05/05 19:24

Loblaw Companies Limited (TSE:L) has announced that it will be increasing its dividend from last year's comparable payment on the 1st of July to CA$0.5643. Even though the dividend went up, the yield is still quite low at only 1.0%.

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Loblaw Companies' Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. However, Loblaw Companies' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 30.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

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TSX:L Historic Dividend May 5th 2025

View our latest analysis for Loblaw Companies

Loblaw Companies Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was CA$0.98 in 2015, and the most recent fiscal year payment was CA$2.26. This works out to be a compound annual growth rate (CAGR) of approximately 8.7% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Loblaw Companies has been growing its earnings per share at 19% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Loblaw Companies Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Loblaw Companies that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.