Restaurant Brands International (TSX: QSR) is a multinational quick-service restaurant company operating in Canada, the U.S., and many other countries across the globe. It serves customers around the world with popular banners, including Burger King, Popeyes Louisiana Kitchen, Tim Hortons, and Firehouse Subs.
Here are three reasons why I’m continuing to buy Restaurant Brands stock and will hold it for the long term.
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A top dividend stock to buy for the long term
The prominent fast-food QSR company Restaurant Brands currently carries an impressive market cap of $46 billion. Now, trading near an all-time high (roughly $103 per share), the question many investors are focused on is whether Restaurant Brands can continue higher from here.
That said, I think the investing rationale for QSR stock is more robust than that. The company’s dividend yield is one key factor I continue to focus on, in addition to its rather attractive valuation at roughly 26 times earnings.
Specifically, looking at Restaurant Brand’s dividend yield of more than 3%, it’s clear that this is a top stock to consider for income in retirement. A mix of positive same-store sales growth, dividend growth, and stability make a 3% yield look a lot more attractive, particularly as bond yields continue to decline.
Dividend continues to grow
On that note, Restaurant Brands has increased its dividend for eight consecutive years. Since its IPO, the company’s payout has increased more than 25%, and I think there’s plenty of room for dividend growth over time, so long as the company’s bottom-line numbers come in as expected. Sales growth of 11% and earnings growth of 5% are expected for the coming year, and I expect the company’s dividend to grow roughly in line with its earnings over the long term.
Restaurant Brands has one of the best current dividend yields in its sector, and I don’t expect that to change anytime soon. The company’s practice of increasing its dividends over the past five years has been attracting long-term investors for quite some time. Furthermore, QSR also offers a share-buyback option. To date, this company has received approvals to buy back US$1 billion in its own shares over the past two years.
Growth remains robust
In terms of Restaurant Brands’s top line, there’s plenty for long-term investors to like as well. The company has seen compounded annual growth of more than 5% over the past five years. This comes as Restaurant Brands’s management team clearly places a greater emphasis on growing its top line.
Same-store sales growth has continued to shine through as a key metric investors continue to focus on for Restaurant Brands. Indeed, while the company’s footprint continues to grow and new locations continue to be opened in high-growth markets, existing locations are seeing robust sales numbers. This suggests that as inflation comes down, margins should expand, positioning this company well to see its bottom line expand.
Restaurant Brands International boasts a portfolio of 30,000 restaurants internationally. This provides enough space for this business to grow in the forthcoming years, as it is foreseeing a major growth potential from Asian countries, such as India and China.
This company also announced its plans to modify its senior credit facilities to grow its maturity and other related changes.
Bottom line
To conclude, Restaurant Brands International’s financial growth faced major obstacles during the COVID-19 pandemic and Russia-Ukraine war. Despite these headwinds, the company has seen its stock price soar higher once again, as investors seek defensive and stable options in the market.
Accordingly, for those looking for a safe place to hide out in 2024, QSR stock remains among my top picks right now.
