This 1 safe Canadian stock is a gem for retirement planning


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Planning for retirement is not a very complicated task. If you start saving early in life and grow your money by investing in fundamentally sound stocks, you could reach your retirement goal much sooner than expected. More importantly, you should include safe, low-volatility stocks in your portfolio to ensure that uncertain market conditions don’t affect your retirement plan.

In this article, I’ll highlight a safe Canadian stock that I call a retirement planning gem because of its safe business model and long track record of delivering exceptional returns for investors.

A Safe Canadian Stock for Retirement Planning

Before deciding to invest in a company and include it in your retirement planning portfolio, it is very important for you to pay attention to the business model of the company to know its stability. Dollarama (TSX:DOL) is a leading Canadian value retailer headquartered in Mount Royal with a market capitalization of approximately $22.2 billion. It currently operates nearly 1,431 discount stores across Canada. Dollarama also sells selected products through its online store.

In recent months, rising interest rates and strong inflationary pressures have raised fears of an impending recession. Although it is not easy for anyone to predict a recession, it is always good for investors to consider future possibilities before investing. Overall, Dollarama’s business is unlikely to be much affected by a recession, as demand for its discounted essentials remains high even amid economic uncertainty.

Strong track record of exceptional returns

While investing for retirement planning, investors should look at a stock’s track record. If the company has a stable business model, it will continue to generate good returns on your investments, even in tough economic times.

After listing on the TSX in 2009, Dollarama has generated exceptional returns for its investors. To give you an idea, its stock has generated strong positive double-digit returns in nine of the past 10 years, even if we exclude its positive movement in the current year. While most investors may not find its roughly 0.3% dividend yield appealing, its solid track record of delivering outstanding returns every year still makes its stock truly attractive. Even during the pandemic phase, DOL stock continued to generate positive returns, as it rose more than 16% in 2020.

Despite recession fears, Dollarama’s stock price continues to significantly outperform the broader market this year. This safe Canadian stock is currently trading with gains of more than 20% since the start of the year at $76.77 per share against an 11% decline in the TSX Compound reference.

During the April quarter, Dollarama reported a 12.4% year-over-year increase in total revenue to $1.1 billion, as same-store sales increased 7.3% as part of the easing restrictions on physical activity. Driven by a double-digit increase in customer traffic and growing demand for its affordable everyday products, the company’s adjusted profit for the quarter jumped 32.4% from a year ago to $0.49 per share.

I expect demand for its affordable essentials to remain intact even in tough economic times, which should also help it maintain strong earnings growth in the coming quarters and keep its stock up. .

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