On the Hunt for Steady Dividend Growth? Add These 2 Grocery Stocks Today

Metro, Inc. (TSX:MRU) and Empire Company Ltd. (TSX:EMP.A) have achieved over 20 years of dividend growth, making them ace targets in a shaky sector.

| More on:

Investors can often get hung up on the size of a dividend yield, sometimes neglecting the rate of growth that an income-yielding equity offers. History shows us that growing dividends are the sign of a healthy stock. A sky-high dividend yield is enticing, but odds are, you are better off going with the company that has a proven track record of commitment to its shareholders.

Today, we are going to look at two stocks that have achieved over 20 consecutive years of dividend growth. This puts both in elite company on the TSX index. The grocery sector has attracted some pessimism, with Amazon.com planting its flag with the acquisition of Whole Foods, but many of the top retailers have shown a willingness to adapt in the Canadian market.

Metro (TSX:MRU)

Metro is a Montreal-based grocery and drugstore operator with locations in its home province of Quebec and in Ontario. Shares have climbed 2.5% in 2019 as of close on February 13. The stock is up 24.8% year over year. Late last year, I’d listed Metro as my top grocery stock to own going into 2019.

In late January, Metro released its first-quarter results for 2019. Sales rose 3.5% year over year when adjusting for the acquisition and added revenues from Jean Coutu Group. Adjusted net earnings climbed 35.9% from the prior year to $172.2 million. Back in September 2018, I’d discussed how rising food prices would prop up revenues at grocers in the near term.

Metro declared a dividend of $0.20 per share, which represents an 11.1% increase from the prior year. It also represents a modest 1.5% yield. Metro has now achieved dividend growth for 24 consecutive years.

Empire Company (TSX:EMP.A)

Empire Company operates through many retail banners including Sobeys, IGA, FreshCo, and the recently acquired Farm Boy. Shares of Empire have climbed 6.8% in 2019 as of close on February 13. The stock is up 34% year over year. The company released its fiscal 2019 second-quarter results back in December.

Same-store sales, excluding fuel, rose 2.5% year over year, and Empire reported earnings per share of $0.38 compared to a loss of $0.09 per share in the prior year. The company realized a 48% jump in its adjusted earnings per share to $0.40, solidifying the quarter as one of the strongest in Empire’s history. For the first six months of fiscal 2019, sales have climbed by $375 million to $12.67 billion. Adjusted net earnings have increased by $49.2 million to $210.6 million.

The board of directors declared a quarterly dividend of $0.11 per share. This represents a 1.4% yield. Empire Company has also achieved dividend growth for 24 consecutive years.

Bottom line

Both grocery retailers have started off very well in 2019 and look strong considering the challenges faced in this sector. These stocks offer modest yields, but the steady growth in dividends should come as an enticing bonus for investors on the hunt for equities to hold long term.

Should you invest $1,000 in BlackBerry right now?

Before you buy stock in BlackBerry, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BlackBerry wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of Amazon.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How I’d Invest $7,000 in My TFSA for $660 in Tax-Free Annual Income

Canadians looking for ways to make the most of the new TFSA contribution room should consider investing in these two…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

This Dividend King Paying 7.5% in Monthly Income Is a Must-Have

This high-yield TSX stock might not be a textbook Dividend King, but its reliable monthly payouts and improving financials make…

Read more »

path road success business
Dividend Stocks

How to Invest $50,000 of Tax-Free Cash as Canada-US Trade Uncertainty Escalates

Few Canadian stocks are as easy a choice as this one, making it perfect during volatile periods.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Generate $200 in Monthly Income With a $7,000 Investment

Want to establish $200 in monthly income (or even more?) Here's an easy way to start today that will provide…

Read more »

Printing canadian dollar bills on a print machine
Dividend Stocks

Got $25,000? Turn it Into $250,000 in a TFSA as the Canadian Dollar Rises

Investing doesn't have to be risky or difficult, especially with this top stock.

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

Where Will Loblaw Be in 3 Years?

Loblaw (TSX:L) stock could be a stellar performer as tariffs and headwinds move in on Canada's economy.

Read more »

customer uses bank ATM
Dividend Stocks

Where Will National Bank Be in 5 Years?

National Bank of Canada (TSX:NA) stock still looks like a great deal at these levels.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

The Smartest Industrial Stock to Buy With $3,000 Right Now

Aecon is a value stock that's benefiting from strong infrastructure spending today and in the years to come.

Read more »