Investors seeking dependable long-term returns don’t always need the highest dividend yields. Often, the best dividend stocks combine resilient businesses, consistent earnings growth, and the ability to increase their payouts year after year.
Two Canadian companies that fit this profile are Loblaw (TSX:L) and Dollarama (TSX:DOL). While neither stock is cheap today, both have built strong competitive advantages that could reward patient investors with stability, dividend growth, and capital appreciation over the long run.
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Loblaw: A defensive dividend grower
Given the right valuation, I would gladly own Loblaw. As Canada’s largest food retailer, with higher-margin pharmacy businesses under the Shoppers Drug Mart and Pharmaprix banners, Loblaw operates in industries that remain essential through every stage of the economic cycle.
Loblaw’s strengths extend beyond groceries and healthcare products. The PC Optimum loyalty program encourages repeat visits while providing valuable first-party customer data that helps personalize promotions, optimize inventory, and improve operating efficiency. These advantages strengthen customer loyalty and support long-term profitability.
Loblaw has consistently translated these strengths into solid financial performance. Between 2015 and 2025, the company delivered steady revenue growth, while adjusted earnings per share (EPS) increased at a compound annual growth rate (CAGR) of 10.8%. That earnings growth supported a similar pace of dividend increases, making Loblaw a solid idea for dividend-growth investors.
The main drawback is valuation. At $62.87 per share at the time of writing, the stock trades at a blended price-to-earnings (P/E) ratio of roughly 25, about 50% above its historical average. If valuation eventually returns to more typical levels, the shares could experience a correction. Even so, high-quality companies rarely stay inexpensive for long, making Loblaw a stock worth keeping on a watchlist.
Dollarama: Growth supports future dividend increases
Dollarama has also established itself as one of Canada’s most dependable retailers. Its value-focused business model performs well in both strong and weak economic environments, as consumers consistently seek affordable everyday essentials.
Over the past 10 fiscal years, Dollarama generated revenue growth at a CAGR of approximately 10.6%, while adjusted EPS grew at an even faster 16.8% annually. The retailer’s “treasure hunt” shopping experience, featuring a wide assortment of household goods, consumables, and seasonal merchandise at fixed price points, continues to attract loyal customers and frequent visits.
The company’s growth runway remains compelling. Dollarama operates more than 1,700 Canadian stores and plans to expand that network to roughly 2,200 locations by 2035. Internationally, it owns a majority stake in Dollarcity, which operates more than 700 stores across five Latin American countries. In 2025, the company further expanded its global footprint by acquiring The Reject Shop in Australia.
Like Loblaw, however, Dollarama’s quality comes at a premium. Trading at a blended P/E of about 38, if the shares stay strong, it could move sideways for an extended period of time while earnings catch up.
Investor takeaway
Loblaw and Dollarama are outstanding Canadian businesses that have consistently delivered earnings growth and rising dividends, for over a decade, through a variety of economic conditions. Although their premium valuations may limit near-term upside, their durable competitive advantages make them solid considerations as long-term holdings.
Investors could consider dollar-cost averaging into these stocks and adding more shares during meaningful market pullbacks. For investors focused on stability, dividend growth, and long-term wealth creation, both companies deserve serious consideration.
