High Liner Foods: A Great Value Plus a 3% Dividend

 As investors value dividends more and more, we’ve seen the collective valuations of many consumer staple stocks go from cheap to arguably overvalued.

Coca-Cola (NYSE:KO) trades at 25 times trailing earnings. Kraft Heinz (NASDAQ:KHC) trades at 38 times trailing earnings. And even boring ol’ Kellogg Company (NYSE:K) trades at an expensive 36 times earnings.

Even after accounting for one-time charges, all three of those stocks are expensive. Just like most food companies. Investors are clearly willing to pay up for what they perceive as safety.

High Liner Foods (TSX:HLF) trades at a much more attractive valuation despite being just as steady as any of these other consumer staples stocks. It has a current P/E ratio of just 13 and a price-to-free cash flow ratio of less than 7.

High Liner dominates the frozen seafood market in Canada and the United States, with a market share in excess of 60%. While the breaded fish market is beginning to shrink somewhat, the company’s plan to introduce healthier options is going well.

It’s been a growth by acquisition story over the years. Now that it dominates the North American market, look for the company to turn its attention to other parts of the world where they eat more fish than we do. And remember, as our population ages here at home, fish consumption will likely increase.

The dividend is rock solid as well. It has gone up each year since at least 2006 and the payout ratio is still under 40%. The current yield is 3%.