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Buy This 1 TSX Dividend Stock for Long-Term Growth

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A meat shortage is looming: pork, chicken, and beef could become less easy to find in stores as the coronavirus continues to impact meat processing plants. It’s a tough time to be a shareholder in affected companies — so much for the safety of consumer staples stock!

However, an alternative strategy is emerging — one that could pack long-term upside as well as defensiveness and even some passive income.

Alt-meats have legs!

Plant-based protein could be the key to feeding the masses, as its model is less at risk from supply chain disruption, and is less time and resource intensive. There’s the growth investment thesis to think about, too. Most public names struggle to replicate the buzz of their IPOs.

But alt-meat still packs momentum. Pure-play option Beyond Meat (NASDAQ:BYND) rocketed an incredible 40% last week, for instance.

With food plants closing, a shortage of protein could hit consumers. It would be a gut punch for the economy, too, with the food supply chain already under pressure. This is where alternative foodstuffs comes in. Plant-based meats were already on the cusp of going mainstream. Now it looks as though their time has come.

It’s a double whammy for Beyond Meat. The company is in the process of international expansion, and now the instability of the pork and beef markets is Beyond Meat’s gain. Indeed, any business with exposure to the alt-meat industry could expect to see growth.

Why investors should buy this tasty stock

But Beyond Meat is not the only stock on the markets that offers a play on the meat-free boom. The alt-meat producer saw around 50% of its net sales in 2019 coming in from restaurant and food services sectors. This immediately tells investors that low-exposure routes to spread-risk upside in the alt-meat space can be found in those areas.

Restaurant Brands International (TSX:QSR)(NYSE:QSR) fits the bill here. The umbrella company encompassing Popeyes Louisiana Kitchen, Burger King, and Tim Hortons has been adding plant-based protein to its menus, which has been met with varying levels of success. Its rollout of meat-free options across Tim Hortons was walked back, for instance, with only select provinces participating.

Its Impossible Whopper initiative was more successful. This time around, Restaurant Brands partnered up with Impossible Foods to supply the meat-free patties. Impossible Foods is not publicly traded, though. This makes Restaurant Brands the better catch-all for meat-free upside, as it straddles two major alt-meat pure plays.

Restaurant Brands is a buy even at its current valuation. Yes, its market ratios are higher than the sector averages, with a P/E of 20.6 times earnings and P/B of 6 times book.

However, its 4.4% dividend yield is more than adequate in terms of passive income. In terms of outlook, this stock delivers, with 22% annual earnings growth on the cards. Total returns by 2025 are around 58% by a conservative estimate.

The bottom line

The alt-meat boom could serve up some tasty upside for the long-term investor. Buying shares in a low-exposure name like Restaurant Brands allows access to more than one alt-meat producer, plus an appealing dividend yield.

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 Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool recommends Beyond Meat, Inc. and RESTAURANT BRANDS INTERNATIONAL INC.

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