Earn $5,000 a Year of Passive Income With A&W (TSX:AW.UN)

A&W Revenue Royalties Income Fund (TSX:AW.UN) is a good stock to buy and add to an RRSP or TFSA portfolio.

| More on:
Modern buildings in business district

Image source: Getty Images

How cool would it be if you could just put $100,000 in an account with the promise that in 365 days, you will receive $105,000 back?

For some investors this may seem like a dream, but for investors of A&W Revenue Royalties Fund (TSX:AW.UN), it’s a reality with the stock’s dividend yield at 4.844%!

Aside from A&W restaurants having insanely good burgers, there are two reasons why you need to invest in this stock today.

First, A&W was the first fast-food chain in Canada to offer the Beyond Meat burger. Second, its revenues have been steadily increasing.

The Beyond Meat burger

When I say that A&W was the first Canadian fast-food chain to offer the Beyond Meat burger, I mean that it beat its competitors to the punch almost a year in advance!

A&W rolled out its Beyond Meat burger in July, 2018 across 925 of its locations. The Beyond Burger is served with lettuce, onion, pickles, and tomatoes and offers it without mayonnaise on a lettuce bun.

In June, 2019, Tim Hortons jumped on the Beyond Meat bandwagon and introduced a Beyond Meat breakfast sandwich, wrap and vegan sandwich. Although Tim Hortons announced that it will be pulling its Beyond Meat line out of its restaurants except for those in Ontario and BC, A&W continues to sell the meat-alternative.

This innovation should excite investors, as innovation drives profits. As A&W was the first Canadian fast-food chain to introduce Beyond Meat, A&W likely captured a greater percentage of the market share.

Steadily increasing revenues

At a time when fast-food companies are facing increasing pressure to make its menu options healthier, A&W has proven that it’s able to adapt to trends and satisfy its customers.

As the income fund derives its revenues from franchise royalties, its increasing revenue indicates that restaurant sales are on the rise. An article by BNN Bloomberg confirms this with reported same-store sales up 10% for the first quarter of 2019.

Investors should be pleased to hear that revenues are growing at a compounded annual growth rate of 7.17% from $29 million in fiscal 2014 to $41 million in fiscal 2018.

As A&W continues to add stores across Canada, investors should be reassured that an investment in the income fund is well worth the money.


Although A&W does not have the reach of McDonald’s or the trendiness of Shake Shack, it has definitely made a name for itself in Canada.

With the introduction of the Beyond Meat burger in July, 2018, A&W showed investors that it is not afraid to change with the times. This is very important for an organization given that consumer tastes change very frequently, so having that flexibility is a plus.

The income fund has also reported growing revenues in each of the past five years. This growth in revenue indicates increased same-store sales, which suggests that business is growing.

If you liked this article, click the link below for exclusive insight.

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 Chen Liu has no position in any of the stocks mentioned. A&W Revenue Royalties Fund is a recommendation of Dividend investor Canada.

More on Investing

A worker gives a business presentation.
Dividend Stocks

TSX Communications in April 2024: The Best Stocks to Buy Right Now

Here are two of the best TSX communication stocks you can buy in April 2024 and hold for years to…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Watching This 1 Key Metric Could Help You Beat the Stock Market

One key metric that Buffett looks at is the return on equity. Here's why you should watch it.

Read more »

Man considering whether to sell or buy
Dividend Stocks

Royal Bank of Canada Stock: Buy, Sell, or Hold?

Royal Bank of Canada (TSX:RY) has a high dividend yield. Should you buy it?

Read more »

oil tank at night
Energy Stocks

Is Suncor a Buy, Sell, or Hold?

Suncor Energy stock is off to a strong start in 2024. Is the TSX energy stock a good buy right…

Read more »

Daffodils in bloom
Tech Stocks

2 Best “Magnificent Seven” Stocks to Buy in April

Two surging mega-cap tech stocks are the best buys among the “Magnificent Seven” this April.

Read more »

A golden egg in a nest
Stocks for Beginners

Got $5,000? 5 Stocks to Buy for Lasting Wealth

Got $5,000 to build a long-term compounding stock portfolio? Here are five top Canadian stocks to building lasting lifetime wealth.

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

BCE’s Stock Price Has Fallen to its 10-Year Low of $44: How Low Can it Go?

BCE stock price has dipped 39% in two years and shows no signs of growth in the next few months.…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Invest $10,000 in This Dividend Stock for $3,974.80 in Passive Income

This dividend stock gives you far more passive income than just from dividends alone, so consider it if you want…

Read more »