Happy Canada Day!
As we celebrate the anniversary of Confederation in 1867, it is a great time to think about investments which can help Canadians create a strong financial foundation.
The following two stocks are popular recommendations here at The Motley Fool. These stocks can form the basis of an investment portfolio or make great additions to an already established one.
The first recommended stock, Fortis (TSX:FTS)(NYSE:FTS), provides a relatively secure dividend for those investors seeking reliable income. The second recommendation, Restaurant Brands International (TSX:QSR)(NYSE:QSR), is the parent company of Tim Hortons and represents significant upside potential.
Utilities such as Fortis are considered relatively stable because the services they provide are essential, even during uncertain times like the current global pandemic.
As of this writing, shares in Fortis are trading at $51.26. Over the past year, the stock has traded in the low-$40s to almost $60 per share. With shares down approximately 14% from their 52-week high, the stock is at an attractive entry point.
Investors like Fortis because it has a long history of reliable dividends. The company has raised its dividend every year for over 45 years.
With a current dividend yield of 3.73% and a conservative payout ratio, shareholders can appreciate secure reliable income. The company is expected to increase its dividend by 6% a year over the next five years.
Few companies are more synonymous with Canada than Tim Hortons. Investors looking to own a piece of the company can invest in its parent company, Restaurant Brands International.
Although Tim Hortons is probably most well-known to Canadians, it is another brand of the company that is garnering the most attention of late: Popeyes. This popular restaurant chain is quickly becoming the crown jewel in RBI’s portfolio.
CEO Jose Cil recently penned an open letter to shareholders reflecting his short tenure (of 18 months at the helm) and how the company has fared during COVID-19. The letter, 100 Days Later: Recovery, Growth and Reflection, reiterates Cil’s vision and his commitment to building the most loved restaurant brands in the world.
Per the company, RBI is now “far stronger” today after experiencing an “unplanned journey” due to the unprecedented times of the coronavirus pandemic. The company made several changes to quickly adapt to the mandates placed on restaurants as the outbreak began.
RBI focused on digital innovation and rewrote code for its apps to introduce curbside pickup and expand delivery. As Cil said, “The outcome has been a significant increase in digital sales in North America and we believe this trend shift to digital is what guests will continue to demand.”
Shares in RBI are trading at $74.33 as of this writing. The dividend yield is currently 3.73%. Over the past year, the stock has traded between the range of between $36.48 and $105.93.
The bottom line
With its reliable dividend, Fortis can provide investors with sustainable income for years to come. And if RBI can duplicate the recent success of Popeyes at Canadian favorite Tim Hortons, the stock presents an excellent growth opportunity.
For long-term investors, owning shares in iconic Canadian companies is a great way to celebrate Canada Day.
Have a wonderful holiday!
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 Cindy Dye owns shares of FORTIS INC. The Motley Fool recommends FORTIS INC and RESTAURANT BRANDS INTERNATIONAL INC.