The TSX Composite Index has seen about 5% value erosion in the last month due mainly to growing macroeconomic uncertainties. This recent selloff in the Canadian stock market has made most new investors worried about their investments, especially those witnessing such dramatic fluctuations for the first time in their stock investing journey.
If you’re new to the stock market, your initial reaction of panic is natural, as your hard-earned money seems to be declining on paper. However, you must understand the importance of the long-term approach. Despite facing short-term turbulence, fundamentally strong stocks usually trend upward in the long run, which can help you multiply your savings.
In this article, I’ll highlight two of such fundamentally strong, top retail stocks you can buy on the TSX today and hold for years to come. Interestingly, these retail stocks also reward their investors with decent dividend payouts.
Empire Company stock
Empire Company (TSX:EMP.A) is my first TSX retail stock pick you can consider today. This Stellarton-headquartered food and fuel retailer currently has a market cap of $9.3 billion as its stock trades at $37.50 per share with about 5.2% year-to-date gains, outperforming the broader market. At this market price, it has an annualized dividend yield of 2% and distributes its dividend payouts every quarter.
In its fiscal year 2023 (ended in April), Empire Company’s sales rose slightly by 1% YoY (year over year) to $30.5 billion with the help of higher fuel sales. Despite higher revenues, however, the company’s adjusted net profit slid 3% from a year ago to $727.1 million due mainly to a recent change in consumer behaviours and higher food inflation. Besides that, a cybersecurity incident also trimmed its profitability last fiscal year.
Nonetheless, its financial growth in the first quarter (ended in July 2023) of fiscal year 2024 showed improvements. During the quarter, its sales rose 1.7% YoY, while its adjusted earnings grew positively by 9.9% from a year ago.
Overall, Empire Company’s increasing focus on driving efficiency and cost-effectiveness could help it expand its margins in the long run, making this top TSX retail stock worth holding for the long term.
Loblaw stock
Loblaw Companies (TSX:L) is another strong TSX retail stock you can add to your portfolio today. This Brampton-based retail firm currently has a market cap of $36 billion, as its stock trades at $114.97 per share after declining by 4% in 2023 so far. The stock offers a 1.6% annualized dividend yield at the current market price.
Despite ongoing macroeconomic concerns, the ongoing growth trends in Loblaw’s financials look impressive. In the first half of 2023, the company’s total revenue rose 6.9% YoY to $13.7 billion with the help of a solid 13.9% increase in its e-commerce sales. More importantly, its adjusted earnings during the same six months surged by 14.8% YoY to $1.94 per share.
As Loblaw’s value offerings of private brands help customers save, its sales usually remain strong even in tough economic conditions, making this TSX retail stock attractive to buy and hold for the long term.
