The following two Canadian corporate giants have weathered economic and sector storms over the years. Both have been in business for a long time, and for good reason. Here’s why each company could add some impact to a portfolio.
1. Canadian Tire Corporation Limited
Same-store sales increase
Canadian Tire Corporation Limited (TSX: CTC.A)had good Q2 2014 results, and the company has initiatives in place to further bolster its strength. Important to note for anyone considering an investment in Canadian Tire is its growth in same-store sales at its Canadian Tire, FGL Sports, and Mark’s retail operations. It’s vital to consider same-store sales, as this gives an indication of the health of a company’s established operations in contrast to new stores in a company’s network.
Canadian Tire also garners revenue from its approximately 1,700 retail and gasoline outlets and its financial services operation. The company benefited in Q2 from increased gasoline prices.
Strong retail network and a new store format
A minimum of one Canadian Tire store, which is the company’s flagship banner, is within 15 minutes of 90% of Canadians. There are 136 Canadian Tire retail stores in western Canada, 202 in Ontario, 99 in Quebec, and 55 in eastern Canada. In 2013, Canadian Tire signed a milestone 11-year contract with its Canadian Tire Dealers. For 2014, Canadian Tire’s objective is to invest and grow its existing retail networks.
In 2013, Canadian Tire launched 62 “Smart” stores. These include Canadian Tire Express, its urban format. For 2014 its goal is to complete 40 Smart store projects. These stores feature a racetrack floor plan, high walls and ceilings, enhanced category adjacencies, and easy-to-read navigational signage. All future Smart stores will include an expanded living category focused on the home manager, with expanded assortments, displays, and improved products next to them.
A consistent dividend payer
Last week, Canadian Tire declared a quarterly dividend of $0.50 per share. Its current dividend yield is 1.84% and its dividend rate is $2.00. Its five-year average dividend yield is 1.7%.
2. Manulife Financial Corp.
Broad product and service offerings
The 11th largest global life insurer, Manulife Financial Corp. (TSX: MFC)(NYSE: MFC), has a broad portfolio of products and services that it offers through its principal operations in Asia, Canada, and the U.S. It provides financial protection and wealth management products and services, as well as asset management services to institutional customers.
Growth in Asia and overall funds under management
Manulife’s 2013 core earnings in Asia were $921 million, or 28% of core earnings. Canada came in at $905 million, or 27% of core earnings. The U.S. accounted for $1.51 billion of core earnings, or 45%; its U.S. insurance division operates under the well-known John Hancock banner.
However, Manulife sees great room for growth in Asia. It operates in 12 Asian nations. Last year it attained record wealth sales in Asia of $8.5 billion. It also expanded its distribution platform across Asia. It did so by bolstering distribution agreements and by signing new ones like its bancassurance agreements in Malaysia and Vietnam.
For Q2 2014, Japan continued to be the company’s most significant driver of insurance sales growth.
As at June 30, 2014, Manulife and its subsidiaries had funds under management of roughly $637 billion.
A consistent dividend-payer
Manulife is also a consistent dividend-payer. This month, the company’s board approved an increase of 19%, or $0.025 per share, to the quarterly common shareholders’ dividend. This results in a dividend of $0.155 per share. Its current dividend yield is 2.84% and its dividend rate is $0.62. Its five-year average dividend yield is 3.6%.
Perform your due diligence on these two companies and contemplate if each fits your investing style. Both offer industry diversification in Canada and the potential for increased and sustainable ROI.
