Warren Buffett Sold This Canadian TSX Stock

Warren Buffett sold his stock market position in the Canadian TSX stock Restaurant Brands International (TSX:QSR)(NYSE:QSR).

| More on:

Warren Buffett is still one of the world’s most respected stock market investors. Buffett is well known for being successful at long-term value investing. Nicknamed “The Wizard of Omaha,” stock market participants watch his buying and selling activity to gain crucial insights into the market.

When Warren Buffett sells a stock, shareholders pay attention. Because he’s a long-term investor, a sell from Warren Buffett forebodes trouble. For example, Warren Buffett sold all his airline holdings during the March 2020 market sell-off.

This year has been tragic for investors in the airline industry. The COVID-19 pandemic decimated both personal and business travel worldwide. With airplanes grounded, and as pandemic worries continue, shareholders in airlines don’t know when they will see value return to their investments.

Warren Buffett also sold out of another interesting stock recently. He sold his position in the Canadian stock, Restaurant Brands International (TSX: QSR)(NYSE: QSR). Buffett partially funded a US$12.5 billion merger between Tim Hortons and Burger King, leading to the creation of this entity.

Are restaurants doomed in the COVID-19 era?

Restaurants face greater regulatory burdens today than they did before the pandemic. The industry must comply with more strict sanitation expectations as well as capacity restrictions.

Restaurants typically gain profit from low margins. Restrictions on seating capacities in restaurants further strains this business model. These burdens reduce revenue and profit growth.

Moreover, while take-out seems to be keeping many restaurants afloat, people are still choosing to eat at home more than they did before the pandemic.

Many restaurants have closed their doors completely or reduced their hours. This industry is in a precarious position. No wonder Warren Buffett chose to sell out.

Warren Buffett sells Restaurant Brands International stock

Restaurant Brands International stock fell to a 52-week low of $36.48 during the March 2020 market crash. Prior to the pandemic, investors traded the stock near the 52-week high of $95.72 per share. At the time of writing, the market value of the stock is $77.52.

This restaurant stock is a Dividend Aristocrat currently issuing an annual dividend yield of 3.53% at the current market value. That’s a decent income for a retirement portfolio or Tax-Free Savings Account, but it may not be worth the risk today.

Warren Buffett certainly didn’t want to continue betting on this restaurant stock. Although Restaurant Brands International has a good dividend payment history, it may not be worth the risk for your stock market portfolio.

Is Restaurant Brands International stock a good investment?

Some analysts believe that Restaurant Brands International is still a good investment, especially now that it is priced lower than the highs in the fall of 2019. These commentators point to a strong balance sheet.

Nevertheless, there are much better investments on the Toronto Stock Exchange. These stocks are also trading below 52-week highs reached before the global COVID-19 pandemic. Stocks in financials, insurance, and utilities might be better bets today than restaurants.

Wherever you choose to save your hard-earned income, fully research any investments before making a decision. Invest slowly and confidently to avoid stress from stock market investing.

Developing a healthy mindset toward your investment decisions will help keep emotion in check. Making buy and sell decisions based on fear or over-optimism are the biggest mistakes an investor can make. Learn something from Warren Buffett and maintain a long-term view on your investments to succeed in the stock market today.

Fool contributor Debra Ray has no position in any of the stocks mentioned. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.

More on Dividend Stocks

House models and one with REIT real estate investment trust.
Dividend Stocks

Here’s the 6.8% Dividend Stock I Keep Coming Back To

SmartCentres REIT (TSX:SRU.UN) stands out as a near-7% yield dividend play that's worth coming back to for yield.

Read more »

Child measures his height on wall. He is growing taller.
Dividend Stocks

New to Investing? Start With This Canadian Dividend Stock

This Canadian stock has a proven record of paying dividends and consistently raising their payouts in the years ahead.

Read more »

ETFs can contain investments such as stocks
Dividend Stocks

VFV Isn’t a Complete Portfolio: Here’s What Canadian Investors May Be Missing

VFV feels like a complete portfolio, but it’s really a concentrated bet on U.S. large caps and the U.S. dollar.

Read more »

Partially complete jigsaw puzzle with scattered missing pieces
Dividend Stocks

Don’t Want to Wait a Year for a GIC Payout? This 11.7% Dividend Stock Pays You Monthly

Hamilton Canadian Financials Yield Maximizer ETF (TSX:HMAX) stands out as the ultimate passive-income booster, but it's far different than GICs.

Read more »

dividends grow over time
Dividend Stocks

GIC or Dividend Stock? Here’s Where I’d Put $10,000 for Income and Growth

Rogers can beat a one‑year GIC on income and long-term upside, but only if you can handle volatility and debt…

Read more »

Agricultural harvesting at the last light of day, aerial view.
Dividend Stocks

Potash Power Play: Why This Overlooked Commodity Could Be Canada’s Trump Card

Canada’s potash dominance gives Nutrien a strategic edge as trade tensions rise, making this overlooked commodity worth watching closely.

Read more »

gold prices rise and fall
Dividend Stocks

Trade War 2.0: The TSX Stocks That Could Actually Benefit From U.S. Tariffs

These two TSX stocks could give investors great ways to benefit from Trade War 2.0.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

A 6% Yield Won’t Save a Weak Dividend: I’d Buy This Growing Payout Instead

A lower 3.3% yield can beat a 6% yield over time if the dividend keeps growing, and Manulife is showing…

Read more »