If you’re investing for the next few decades, you’ll witness the dividends of Canadian dividend-growth heroes swell year after year. Some of the most resilient dividend growers can sustain 5-6% annual dividend growth, while others may be capable of 10% or more from here. In this day and age, it’s hard to score that kind of raise in any given year, let alone year after year.
That’s why I’m a big fan of the dividend growers if you’re young and have time on your side. Every year, your dividend payment will get a raise. And if you can steer clear of dividend cuts, you may just be setting yourself up for a nice income stream down the road, not to mention the capital gains you’ll enjoy over the next 10-20 years.
In the meantime, stocks will fluctuate, perhaps in a vicious fashion, as investors go from greedy to fearful again. Even after an ugly ending to the week, the CNN Fear and Greed index still points to “greed” as the main emotion on Wall Street. Whether or not this pullback will worsen, I see lots of value to be had on the TSX, an index that could outdo the S&P 500 yet again.
TD Bank (TSX: TD) and Restaurant Brands International (TSX: QSR) stand out as TSX dividend-growth stocks that scream value.
TD Bank
TD Bank is a Canadian bank that’s sunk lower alongside the broader Big Six basket. Recessions hit bank stocks hard. And there’s really no easy way around the loan losses that downturns entail. This isn’t TD’s first recession, and it won’t be its last. The bank has a strong capital position and will be busy making the most of its recent acquisitions (Cowen and First Horizons) to beef up its growth profile.
TD stock may not pay off overnight, as it could be an ugly next couple of months for the banks. Regardless, TD is a dividend grower with a mere 9.6 times trailing price-to-earnings multiple. The 4.2% dividend yield is also on the high side for a bank that’s still at the top of its weight class!
If you can deal with short-term pain for long-term gain, TD stock is tough to pass up here. Even as loan losses creep higher, look for higher NIMs (net interest margins) to help partially alleviate other growth stressors.
Restaurant Brands International
Restaurant Brands is a fast-food firm that’s been really warming up in recent months. Burger King and Tim Hortons should fare better, as consumers opt for value menus over pricier upscale eateries.
Further, management changes should inspire change, as the firm looks to bring out the best in its roster of brands. Burger King, in particular, is a chain that seems beefed up, with big investments and Patrick Doyle joining the team on the U.S. side.
At 20.1 times trailing price to earnings, with a 3.22% yield, QSR stock is a dividend grower that should not go ignored, as it looks to breach multi-year heights.
