With market volatility at a high, many investors continue to speculate about what the best investment options are at this juncture. Defensive investments, such as utilities, are one favourite option, offering a recurring revenue stream and a handsome dividend stream that’s hard to beat.
A similar argument could be made for precious metals, which has served as the go-to investment for those seeking a lower risk store of wealth in times of uncertainty.
Surprisingly, there is another defensive area of the market that may seem a little strange at first: fast food. Take a moment to digest that thought while I mention Restaurant Brands International (TSX: QSR)(NYSE: QSR).
Now serving…a great long-term investment
Restaurant Brands is the name behind popular fast food brands Burger King, Popeyes Chicken, and Tim Hortons. The company has a superb management team at its helm that has leveraged the strengths of each of its holdings to fill a gap in another.
By example, Burger King is a well-known burger chain with thousands of locations in dozens of countries. Tim Hortons is well known in Canada and in some border states of the U.S., but apart from that limited coverage area, the coffee-chain is relatively unknown.
In order to remedy that, Restaurant Brands took that successful franchising model from Burger King and applied it to Tim Hortons. As a result, Canada’s most-identifiable coffee and donut chain now has a growing presence around the world.
In terms of results, Restaurant Brands reported US$1,479 million in total revenue during the most recent quarter, thus surpassing the US$1,385 reported in the same period last year.
On an adjusted basis, Restaurant Brands earned US$351 million, or US$0.75 per share in the quarter. By way of comparison, in the same period last year, the company earned US$318 million, or US$0.68 per share.
Why should you buy now?
Fear played a key factor in the current downturn — and it’s that fear which has exposed some remarkable bargains on the market. As the well-known quote from Warren Buffet goes, “Be greedy when others are fearful…”
That advice could be taken quite literally, as Buffet has expressed his appreciation for Restaurant Brands in the best way possible — an 8.4 million share stake worth over US$500 million.
For Restaurant Brands, that opportunity extends beyond the “for sale” slapped upon every stock at the moment. To put that opportunity into perspective, Restaurant Brands now trades at levels not witnessed since December of 2018, and this is a stock that is known for double-digit growth, handsome dividend hikes and aggressive stance toward expansion.
To put it another way, why wouldn’t you buy Restaurant Brands right now?
Even if the market continues to decline and we end in a recession, it will only further that case, as Restaurant Brands is an excellent defensive holding. Consumers will not stop spending on is fast food during a slowdown.
If anything, during downturn periods, value-seeking customers will flock to fast food chains in numbers for bargain-priced menu fare in lieu of even casual table dining options elsewhere.
Throw in a very tasty (pun intended) dividend that’s both secure and growing and you have the perfect long-term investment for today’s volatile market.
