Canadians: 2 Cheap, but Stellar Dividend-Growth Stocks to Buy Now and Hold for Decades

TFI International Inc. (TSX:TFII) and another discounted dividend-growth stock that Canadians should scoop up amid the volatility.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

The TSX Index is still chock-full of bargains, even after its tremendous relief rally sparked by aggressive actions from the U.S. Fed.

As a do-it-yourself stock picker, you can pick your spots carefully and scoop up value even during times when it’d probably be a bad idea to put money in a broader TSX index fund, which some pundits believe is overdue for a correction.

Without further ado, consider the following two attractively valued dividend-growth stocks to help you build substantial wealth through the decades.

TFI International

TFI International (TSX:TFII) is a Canadian transport and logistics company that keeps on trucking. Shares of the less-than-load (LTL), or small-freight, trucker got battered in the crash, losing around half its value from peak to trough. Today, shares of TFII have mostly recovered. However, I think they still look undervalued. This is an economically sensitive play that can offer massive gains in a cyclical upswing.

At the time of writing, TFII stock trades at 2.04 times book and 6.2 times EV/EBITDA, both of which are lower than the stock’s five-year historical average multiples of 2.2, and 8.6, respectively. The dividend, which currently yields just 2.4%, has grown at a high single-digit rate over the years. I expect this trend to continue through the decades, as management continues to make meaningful long-term improvements to its operating efficiency.

TFI has had its fair share of stumbles in the past, thanks to a few self-inflicted operational issues. But over the years, the firm has corrected its mistakes and appears to have learned a great deal. Of late, TFI has been firing on all cylinders and is a terrific way to play to the recovery of the North American economy.

Restaurant Brands International

Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock just reeks of dividend growth. The fast-food kingpin behind such names as Popeye’s, Tim Horton’s, and Burger King has a wide moat and a high-growth business model that’s also capital-light. The intangible value of the power behind QSR’s brands, I believe, has been heavily discounted by folks on the Street over the years.

The pandemic has caused sales to trend sharply lower. A possible second wave of infections could cause just as much damage in quarters to come. For longer-term thinkers, though, the nearer-term headwinds shouldn’t cloud the lucrative long-term growth story. Restaurant Brands has many levers to grow its top-line while making moves to improve upon its return on invested capital (ROIC) through menu innovation. There’s a world of growth potential for Restaurant Brands. With more than enough liquidity (1.98 quick ratio) to survive this coronavirus onslaught, the company will live to see much better days.

In a post-pandemic environment, when ‘inferior goods’ like fast food will be in higher demand, Restaurant Brands will likely be quick to bounce back. The next thing you know, it will find itself gushing with cash again, giving it the option to pursue another acquisition, reward shareholders with whopper-sized dividend increases, finance a beefy share repurchase program, or a combination of the three.

In any case, QSR looks like a wonderful growth business that’s priced more like a stalwart.

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 Joey Frenette owns shares of RESTAURANT BRANDS INTERNATIONAL INC. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.

More on Dividend Stocks

A plant grows from coins.
Dividend Stocks

2 Young TSX Stocks You’ll Be Glad You Bought in 10 Years

Youth means nothing when you plan to hold strong companies long term. These two TSX stocks should therefore be first…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

Is it a Trap? 3 TSX Stocks With Ultra-High Dividend Yields 

Who doesn’t love dividends? But the high-interest rate environment makes ultra-high dividends unsustainable. Are these stocks a value trap?

Read more »

Value for money
Dividend Stocks

3 Value Stocks for Superior Returns in 2023

Given their solid underlying businesses, stable cash flows, high dividend yields, and attractive valuations, these three undervalued TSX stocks could…

Read more »

Financial technology concept.
Dividend Stocks

2 TSX Value Stocks to Buy for Peace of Mind (and a Crazy-Good Deal)

2 TSX stocks that could outperform in the long term.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

2 of the Best Canadian Dividend Stocks I’d Buy Before March 2023 Ends

Here are two of the best Canadian dividend stocks you can buy on a dip in March 2023 to hold…

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

3 Value Stocks That Smart Investors Should Seriously Consider

You get it all with these stable stocks. They may have less growth now, but will have incredibly high growth…

Read more »

Chalk outline of two arrows pointing in opposite directions
Dividend Stocks

2 TSX Stocks I’d Buy Instead of Sitting on Cash

These two TSX stocks are my top choices if you want companies that are going to recover quickly after a…

Read more »

Canadian Dollars
Dividend Stocks

Want $1,000 Per Quarter in Passive Income? 2 TSX Stocks That Do the Job

Are you looking to earn $1,000 in passive income each quarter? These two TSX dividend stocks can help you achieve…

Read more »