The market volatility we saw towards the end of 2024 is alive and well so far in 2025. That has investors seeking defensive stocks and contemplating some existing investments. One of those is Metro (TSX:MRU). Here’s a look at whether investors should buy, sell, or hold the grocer in 2025.
The case to buy
Metro is one of the largest grocers in Canada. The company also enjoys a sizable pharmacy arm through its Jean Coutu brand. In total, the grocer comprises approximately 1,000 grocers and 640 pharmacy locations under a variety of brands.
That’s a compelling reason to note on its own when considering whether to buy, sell or hold Metro. That appeal is amplified further, given the sheer necessity of the products it offers. Specifically, food stocks like Metro can offer growth and defensive appeal.
That impressive defensive moat can prove to be another key point for prospective investors, particularly if the threat of tariffs leads to a recession.
Finally, investors considering buying, selling or holding Metro this year should note that the grocer pays out a respectable 1.62% yield. That’s not the highest dividend on the market, but it is well-covered and growing.
Speaking of growth, Metro’s stock price has soared a whopping 33% over the trailing 12-month period. That growth is likely to continue, given its defensive moat and strong growth appeal.
In short, investors looking for a defensive stock to counter volatility that can provide both growth and income may want to consider Metro.
The case to sell
For all the defensive appeal that Metro does attract, investors should note several key points before considering whether to buy, sell, or hold Metro.
Despite Metro’s sizable footprint, the grocer’s network is focused overwhelmingly on the Quebec market. Metro has double the number of stores in Quebec compared to Ontario, which has the second-largest number of stores. Outside of Quebec and Ontario, Metro enjoys a smaller presence.
This somewhat dilutes the appeal of a national chain, and that same risk applies to the pharmacy business. The pharmacy business is even more focused on Quebec, with over 500 of the approximately 640 locations in Quebec.
In other words, a slowdown impacting just parts of La Belle Province could disproportionately impact Metro.
Another point investors may want to take a closer look at is Metro’s dividend. While it is stable and growing, the yield offered is far less than even a high-yield savings account. Many of those accounts still offer a 4% yield, which is more than double Metro’s yield.
In other words, existing investors looking for an income producer may be better suited to look elsewhere in this market.
The case to hold
Existing investors of Metro have a third option to consider: holding.
Metro’s defensive appeal is something that all investors should consider in this market. The concentration of locations in Quebec and Canada also helps Metro’s distribution business.
This can provide the grocer with a huge market advantage, particularly as the “buy Canadian” movement continues to take hold.
Another reason for investors to hold when looking at whether to buy, sell, or hold is that dividend. Yes, the yield is lower than other dividend stocks, but the importance of a well-covered dividend cannot be understated.
In fact, Metro’s quarterly dividend has a respectable payout ratio of just 32% which makes it one of the most stable on the market. Adding to that appeal is the fact that Metro has provided investors with annual upticks to that dividend going back years.
Specifically, Metro has provided an annual increase for a whopping 23 consecutive years.
That fact, along with its defensive appeal, makes Metro a great stock to hold for the longer term.
Decision: Buy, sell, or hold?
No stock is without risk, and that includes a defensive pick like Metro. Fortunately, the grocer has a sizable defensive moat and a well-covered dividend that should appeal to most investors.
In my opinion, Metro is a great stock to buy and hold as part of a larger, well-diversified portfolio.
