When you invest in a stock for the long term, it’s like entering a serious relationship. You want dependability. You want growth. And above all, you want something that won’t give you headaches every time there’s market noise.
That’s what makes Loblaw Companies (TSX: L) a great buy-and-hold stock for long-term investors. It’s a company that doesn’t just sell groceries and healthcare products. It offers peace of mind to its loyal investors. With a long track record of growing profits, raising dividends, and expanding its footprint across Canada, Loblaw checks all the right boxes for anyone looking for a reliable compounder you can hold for decades.
In this article, I’ll explain why Loblaw could be a top TSX stock to buy today and simply hold through thick and thin.
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A magnificent TSX stock you can hold for decades
As Canada’s largest grocery and pharmacy chain, Loblaw has over 2,800 locations and a presence in everything from food and health to fashion, financial, and mobile services. At the time of writing, its stock trades at $222.19 per share and carries a market cap of $66.6 billion. It pays a small but rising dividend every quarter, currently yielding just over 1%.
One of the main factors that has made this buy-and-hold stock even more attractive lately is its stable performance. Interestingly, Loblaw stock has jumped by over 32% in the last year and has surged nearly 221% over the last five years.
Improving profitability supports long-term confidence
In the latest quarter ended in June, the company posted a 5.2% YoY (year-over-year) rise in its total revenue to $14.67 billion with the help of higher customer traffic, larger basket sizes, and new store openings. Its same-store sales for the quarter also climbed 3.5% YoY in food retail and 4.1% in the drug retail segment.
Last quarter, Loblaw’s discount banners like No Frills and Real Canadian Superstore outperformed as customers looked for value in a high-cost environment. Meanwhile, its pharmacy and healthcare services also performed well, with same-store sales jumping 6.2% YoY due to strong demand for specialty prescriptions.
Loblaw’s bottom line is just as impressive as its top line. In the latest quarter, the company’s adjusted net profit jumped 8.6% YoY to $721 million. The company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also climbed 7.4% from a year ago to $1.84 billion, while adjusted EBITDA margins remained stable at 12.5%.
Why Loblaw stock is built for the long run
What really makes Loblaw a great buy-and-hold stock isn’t just what the company is doing today, but what it’s consistently working towards for the future. Notably, the company plans to open about 80 new stores and 100 pharmacy clinics this year. So far, it has already opened 20 stores and 23 clinics. On the brighter side, it’s also ramping up automation at its new East Gwillimbury distribution centre to improve efficiency, which should lead to better profitability.
And with a fresh 4-for-1 stock split coming in August, Loblaw stock will become even more accessible to retail investors. All these positive factors make Loblaw a top stock to buy today and simply hold for decades.
