Why You Should Buy High Liner Foods Inc.

High Liner Foods Inc. (TSX:HLF) offers investors a great dividend and growth prospects that are set to increase over time.

| More on:
seafood

One thing that never ceases to amaze me is the sheer number of options that are available to investors across nearly every segment of the economy.

One such area is the food and beverage industry. Incredibly, many of the companies that operate in this segment provide the everyday products that we see daily on store shelves, yet we routinely pass on these companies as investments or take them for granted, despite being lucrative investments.

Here’s a look at one such company.

Meet High Liner Foods

High Liner Foods Inc. (TSX:HLF) is one of the largest frozen seafood suppliers on the continent. The company sells products under a variety of well-known seafood brands in Canada, Mexico, and the U.S., and remains a major supplier to food retailers on the continent.

High Liner has been a major seafood supplier for well over five decades, and the company has a storied past spanning over a century. Part of that impressive past includes an appetite for expansion, which has resulted in High Liner completing five separate acquisitions over the past decade, propelling the company into the market-leading position it has today.

So, why should investors consider High Liner? Here are a few reasons.

High Liner products are in strong demand and evolving

In Canada, the High Liner brand is not only well known, but it also has double the market share over the closest competitor. That type of commanding market share allows High Liner to provide new products to the market beyond the over 30 different species of seafood High Liner already offers.

Looking to the U.S. market, High Liner has a strong presence in club stores. High Liner brands are steadily building brand awareness throughout the market and are well known for both product innovation and high quality, which is partly the reason that High Liner is the largest value-added supplier of frozen seafood in the U.S.

Consumer tastes are constantly changing. A move away from the breaded, battered, and fried seafood that are stereotypical of frozen seafood products represents an opportunity for High Liner to evolve with the market — and it has. The introduction of several new products such as the Pan Sear, Fire Roasted, and Flame Savours line of products have not only been highly successful, but they remain examples of how High Liner has innovated to meet the changing tastes of consumers.

High Liner provides a great dividend

Investors that are looking for dividend income will be pleased with what High Liner can offer. The company provides a quarterly dividend of $0.14 per share, which provides a very respectable 3.11% yield at the current stock price.

High Liner has provided investors with eight separate dividend hikes over the past five years, and there is little reason to doubt that the company will continue to provide investors with additional hikes in the future.

In fact, the dividend has appreciated well over 50% over the course of the past few years, which may be reason enough for some investors to consider an investment. Even better, the payout ratio for High Liner’s dividend remains at a sustainable rate below 45%.

For the most recent full fiscal report, High Liner posted net income of $32.95 million, or $1.07 per share — an increase over the $29.58 million, or $0.96 per share, posted in the fourth quarter of the previous year.

Is High Liner a good investment?

High Liner represents an intriguing opportunity for investors thanks in part to the great dividend, strong market position, and steady growth prospects for the company. High Liner’s continued push further into U.S. markets will only improve the company’s prospects for the future, and the commanding position that High Liner has in being the largest supplier of frozen fish in the U.S. provides a defensive moat that competitors could only wish for.

High Liner currently trades at just over $18, closer to the 52-week low of $16.40 than the high of $27.62 the stock reached last fall. When factoring the P/E of just 12.48, the case for investing in High Liner gets even stronger, particularly for those investors looking for both dividend income and long-term growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned.

More on Dividend Stocks

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Compelling Reasons to Delay Taking CPP Benefits Until Age 70

You don't need to take CPP early if you are receiving large dividend payments from Fortis Inc (TSX:FTS) stock.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Better Dividend Stock: TC Energy vs. Enbridge

TC Energy and Enbridge have enjoyed big rallies in 2024. Is one stock still cheap?

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »

Investor reading the newspaper
Dividend Stocks

Emerging Investment Trends to Watch for in 2025

Canadians must watch out for and be guided by emerging investment trends to ensure financial success in 2025.

Read more »