Inflation has kicked up in Canada and the United States in the spring and summer months this year. This week, Statistics Canada reported that the Consumer Price Index (CPI) rose 3.1% from June 2020. This was slower than the 3.6% increase in May, but still over the Bank of Canada’s inflation target. This has quieted some inflation concerns but has not silenced the discussion.
Today, I want to look at one dividend stock that is worth owning in an inflationary environment. Let’s jump in.
Empire Company (TSX:EMP.A) is one of the largest grocery retailers in Canada. It owns and operates top brands like Sobeys, IGA, Farm Boy, and others. Its shares have climbed 14% in 2021 as of close on July 28.
The stock is up 19% from the prior year. Prices have been steadily increasing in Canada, which has put pressure on consumers. This year, the Canada Food Price Report projected that food prices would climb between 3% and 5% in 2021.
In the fourth quarter of fiscal 2021, the company saw same-store sales excluding fuel increased 6.1% from the prior year. For the full-year, its gross profit jumped $566 million year-over-year to $7.19 billion. Net earnings rose $118 million to $701 million.
Shares of Empire possess a favourable price-to-earnings ratio of 15. It last announced a quarterly dividend of $0.15 per share, which represents a 1.4% yield. Empire’s annual dividend per share has jumped 15.3% from the previous year.
