3 Reasons Restaurant Brands International Inc. Is a Great Investment

Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) offers a growing dividend, impressive results, and an aggressive growth policy that will keep investors happy.

| More on:

If you haven’t yet added Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) to your portfolio, now would be a good time to reconsider that decision.

For those that are unfamiliar with that very generic name, Restaurant Brands is the company that owns some of the largest quick-service restaurants in the country: Burger King, Tim Hortons, and Popeyes.

Collectively, the three brands account for over 23,000 restaurant locations in over 100 countries.

So, what makes Restaurant Brands a good addition to your portfolio?

1. Growth, growth, and growth

When Burger King and Tim Hortons merged to become Restaurant Brands, they each benefited from the strengths of the other. Tim Hortons took Burger King’s established and incredibly successful master franchise model and applied it to the coffee chain, which had a minuscule international footprint at the time of the merger.

In a relatively short amount of time, Tim Hortons has expanded into several new diverse markets and plans to continue expanding into additional ones. Earlier this year, Tim Hortons opened locations in the U.K. and the Philippines and has franchise agreements in place to expand into Mexico and Spain.

The agreement to open locations in Spain was announced earlier this month and represents a unique opportunity for the company. Spain is one of the leading countries in Europe for cafes and bake shops.

2. Positive results and positive outlook

Restaurant Brands announced a quarterly update for the second fiscal quarter earlier this month. Once again, it was impressive.

Restaurant Brands reported total revenue of US$1,132.7 million, representing an impressive gain over the US$1040.2 million reported in the same quarter last year. On an earnings basis, Restaurant Brands reported adjusted diluted earnings per share of $0.51, which was a $0.10-per-share improvement over the same quarter last year.

System-wide sales reflected an increase of 2.6% at Tim Hortons, 10.6% increase at Burger King, and 3.3% at Popeyes.

3. A growing dividend and decreasing debt

Restaurant Brands is often overlooked as a stock that can provide a source of income. The $0.25 quarterly dividend currently amounts to a 1.32% yield, which hardly seems like a great dividend, but it has plenty of potential to grow.

One point for investors to keep in mind in this regard is the following: Restaurant Brands has hiked the dividend in every quarter since the merger, and given the string of positive results and growth opportunities, it will likely continue that trend.

By way of comparison, just over two years ago, Restaurant Brands paid a dividend of just $0.09.

When Restaurant Brands was formed, the company assumed a massive amount of debt from the deal of over US$11 billion.

Impressively, Restaurant Brands got that figure down to a net debt of just over US$7 billion earlier this year before the Popeyes acquisition sent the debt back up to over US$10 billion.

The level of discipline to cost-cutting synergies and paying down debt is not only impressive, but it’s an asset to a company that has an aggressive growth policy.

Expect that debt figure to continue dropping over the next few quarters, while the dividend continues to creep upwards.

Restaurant Brands remains, in my opinion, a great investment opportunity for those investors looking to diversify their portfolios with a restaurant stock that holds plenty of long-term potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned. The Motley Fool owns shares of RESTAURANT BRANDS INTERNATIONAL INC.

More on Investing

top TSX stocks to buy
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

This dividend stock has been absolutely crushing the TSX 60 and looks like it will continue to do so while…

Read more »

money cash dividends
Stocks for Beginners

Where to Invest $10,000 in April 2024

If you've already created a diversified portfolio and are looking for more options from a windfall, here is where I…

Read more »

data analyze research
Investing

The Ultimate TSX Stock to Buy With $1,000 Right Now

Brookfield Asset Management (TSX:BAM) is one of the best Canadian stocks to buy for those looking to put capital to…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »