Food is one of the most basic necessities humans pay for, and it’s far more critical for survival than utilities and other necessities. However, publicly traded food businesses and, by extension, food stocks don’t have the same level of stability as utility stocks.
Many of them are not even counted among low-volatility stocks in Canada. But that doesn’t mean food stocks are not worth considering, and at least three food stocks should be on Canadian investors’ radar.
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A seafood company
Nova Scotia-based High Liner Foods (TSX: HLF) is one of the largest seafood companies in Canada. The company has been around (in one shape or another) for 125 years and is Canada’s number one frozen fish manufacturer. The bulk of the company’s revenues come from the United States. It has a portfolio of brands, but a substantial segment of its annual revenue comes from its private-label business.
High Liner Foods is a financially and operationally healthy business with a sizable footprint. The stock, however, is mostly attractive because of its dividends, which it’s currently paying at a yield of about 4.5%. The payout ratio, both current and historical, is rock solid.
Another reason to consider this stock now is its attractive valuation. It’s also trading a bit lower than its optimal price, as per multiple analysts. So, if you buy now, you might benefit from a healthy yield and some capital appreciation.
A sugar producer
Rogers Sugar (TSX: RSI) is the country’s largest distributor of refined sugar and has been making Canadians’ lives and food sweeter for well over a century. The company (called Lantic since its merger) has two core product categories — sugar and maple — though sugar dominates and is responsible for over 80% of the revenues.
Food stocks like Rogers Sugar are rarely exciting. They are backed by mature businesses that have already captured the bulk of the target market and have steady revenues.
The long-term growth potential of such stocks might be relatively weak, but the dividends are quite attractive, primarily because of their consistency. So, if you are looking for a reliable, healthy income producer in your portfolio, Rogers and its 6.4% yield are worth looking into.
A dairy company
There aren’t many large-cap stocks in the Canadian food sector. Hence, Saputo (TSX: SAP), with its $12.7 billion market capitalization, stands out. The company has remained firmly in this size category despite losing about 36% of its valuation from its 2016 peak.
It’s one of the top ten dairy producers in the world and has a massive footprint, with dozens of acquisitions in the last three decades and products present in about 60 markets.
It has relatively healthy financials, and even though it experienced modest growth in 2024 (11% from the beginning of the year), the reason for keeping an eye on this stock is different. The company has recently announced multiple leadership changes, including a new chief operating officer and a new chief commercial officer.
If the leadership is capable of restoring investor confidence and attracting new investors, the stock might see a significant rise in the coming years, and if you are keeping an eye on it, you can ride the bullish trend from the beginning.
Foolish takeaway
The three stocks, even if not worth buying this month, are definitely worth looking into. Two of the three stocks are reliable dividend payers, perfect for a passive-income portfolio. While Saputo pays dividends as well, its 2.5% yield doesn’t measure up to the other two.
