Investors in Loblaw Companies (TSX: L) have been on a wild ride this last year. Shares of Loblaw stock have bumped up and down enough to make anyone feel nauseous. Yet long-term investors simply aren’t likely to be feeling the pinch as much.
Loblaw stock has climbed 277% since the beginning of 2012. Why 2012? This is when shares started to finally see a significant climb after the Great Recession days of drops. So sure, investors are happy now after that terrible time. But what about future investors? Should Loblaw stock be back on your radar, or not?
First off, how much did they make?
If investors had purchased $10,000 worth of shares at $31 in the beginning of 2012, that would have brought in 322 shares at that point. Now we’ll fast forward to today. Shares are about $117.50 as of writing, making 322 shares worth $37,835! It doesn’t take a mathematician to see that returns add up to $27,835, without dividends.
But those dividends are worth a look. Dividends were about $0.71 per share annually at that point. Today, that’s climbed to $1.78 per share annually, a current yield of 1.51%. So what would have started out as annual dividends of $228.62 has since ballooned to $573.16!
What happened in the last decade or so?
Now before you go all crazy and buy your own 322 shares of Loblaw stock today, let’s look at what happened over the last decade or so. In the beginning years when this recovery started to happen, the market in general was in a growth period. Yet for Loblaw stock, in particular, there were a few other drivers as well.
The company has had its President’s Choice financial program around for some time, so that’s certainly improved in the last decade. However, it’s the PC Optimum program that’s really seen strength. In the last decade, the company acquired several businesses, as well as made partnerships with others. These have all gained exposure to the Optimum program, leading to more gains for Loblaw stock.
Some of the biggest wins have been the purchase of Shoppers Drug Mart, and partnerships with companies like Esso. But it didn’t end there.
The pandemic was definitely hard on the stock. However, after that Loblaw stock was able to prove its worth as an essential service. The company managed to get out of a loss quite quickly, especially with government help. It has since begun an overhaul of renovations across Canada to bring in more clients.
Is L stock still worth it?
The pandemic has come and gone, the company continues to expand, but there has been some rough terrain in the last year. Namely, inflation could be blamed for some but not all of the higher prices. Noteworthy, Galen Weston got a huge raise, which led to his eventual stepping down from the top executive spot.
Since then, shares have recovered, though remain shaky after earnings that merely met estimates. That being said, Loblaw stock at the end of the day is a diversified investment with countless companies under its umbrella. Finances? Got it. Drug and Beauty? Check. Both luxury and value options for customers? Also check through No Frills and Real Canadian Superstore brands.
All in all, yes Loblaw stock looks like a solid long-term choice. Are you likely to see the same growth between now and another 10 years? Probably not, if I’m honest. But it could certainly bring in substantial income, as well as returns for the patient investor.
