Will SYSCO Corporation (SYY) Help You Retire Rich?

Since we looked at Sysco last year, the company hasn’t been able to earn back the point it lost from 2011 to 2012. But the shares haven’t done badly, rising about 10% over the past year.

Sysco has a nationwide network of distribution centers from which it serves more than 400,000 restaurants, hotels, schools, and other institutional food vendors. That has forced most of its competitors to look for small niches in order to find success. For instance, United Natural Foods, Inc. (NASDAQ:UNFI) specializes in the lucrative natural and organic food segment, where its customers appreciate its focus on the brand names they rely on to keep their shoppers and patrons happy. Similarly, Core-Mark Holding Company, Inc. (NASDAQ:CORE) serves gas-station convenience stores, with their customers wanting snacks and other fast ready-serve food options. Both Core-Mark and United have had substantial share-price gains over the past year, but they don’t really pose a challenge to Sysco’s core business.

Yet with its reliance on the restaurant industry, weakness in restaurant-chain growth can have an impact. Several high-growth eateries have seen slowdowns lately, and higher costs from food inflation could affect demand even further. Sysco has enough pricing power to pass through food costs to customers, but that doesn’t mean customers can always afford price increases.

For retirees and other conservative investors, Sysco’s long streak of dividend increases gives shareholders solid, dependable income at a reasonable valuation. The stock will probably never provide explosive upside potential, but as a steady part of a retirement portfolio, Sysco has attractive attributes.

The article Will Sysco Help You Retire Rich? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Sysco.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.