Maple Leaf Foods: Bringing Home the Bacon With a Tasty Dividend

Maple Leaf Foods (TSX:MFI) stock has had a difficult time in the last year, but after falling 20% in the last few months, it could be time to buy.

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If you’re looking for stable growth and a tasty dividend yield, then Maple Leafs Foods (TSX:MFI) might be the top choice for Canadian investors these days. It’s not that it hasn’t been a difficult rise back from the ashes. In fact, there is still more room to run, which is exactly why now is a great time to consider the dividend stock.

So, let’s get into the delicious details of why you should pick up MFI stock today.

Third quarter was yummy

MFI stock continued to build momentum in the third quarter this year. The company saw total company sales grow 1.1% year over year to $1.245 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also grew for the quarter, with a margin of 10.4%.

What’s more, meat protein and plant protein have been climbing higher and higher. For 2023, meat protein is set to rise by mid- to single-digit sales in 2023, with the adjusted EBITDA margin growing to a target of between 14% and 16% as markets return to normal. Plant protein, meanwhile, should remain stable. But even better, the company is expected to achieve capital expenditure of just $200 million, down from $250 million.

“For the third consecutive quarter, we delivered sequential improvement in adjusted EBITDA margin in our Meat Protein business, while also making meaningful strides toward achieving our adjusted EBITDA neutral goal in our Plant Protein business,” said Curtis Frank, president and chief executive officer (CEO) of Maple Leaf Foods.  “Delivering 11.4% Adjusted EBITDA margin in our Meat Protein business in the face of improving, but still challenging market conditions, demonstrates clear momentum in our core business.”

Analysts agree

Analysts believe the food stock will continue to outperform in the coming year, though perhaps seeing shares rise a bit slower than originally expected. The company should outperform both the sector and the market as conditions improve across the country.

While results were in line with estimates, the big issue was that analysts want to see better volumes in the future, as price increases look to stabilize. In fact, this has indeed created a great scenario for investors, in analysts’ views. These “blemishes,” as one analyst put it, created a downturn in the stock, one that would be a great buying opportunity.

There is “significant upside” for MFI stock, said one analyst, especially as we look ahead to the next year to year and a half. As shares currently trade in value territory, it could be a great buy for investors looking for solid growth and a stable dividend.

Fundamentally strong

MFI stock looks like a solid buy for investors looking for a dividend these days. The company offers a 3.26% dividend yield as of writing. This is significantly higher than its 2.51% average over the last five years.

It’s also stable in terms of valuation. Shares trade at just 0.64 times sales and 2.04 times book value. Furthermore, shares are up 6.58% in the last year, providing some stability in the market. Yet you still get value as the stock trades down about 20% as of writing from highs reached over the summer.

Therefore, if you’re looking for growth in the market as the market recovers, I would certainly consider MFI stock on the TSX today.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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