2 Dividend Stocks Getting Absurdly Cheap

Restaurant Brands International (TSX:QSR) stock and other fast-food firms probably won’t make you rich, but it can help you build wealth!

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With the TSX Index flirting with new highs, Canadian investors have plenty of reason to stay invested in stocks rather than trying to time an exit before the next market correction.

Indeed, Canadian stocks are great to own for the long haul. However, you simply have way more options on the U.S. exchanges. More investment options are never a bad thing!

And though valuations may be suspect at this moment, I still think investors should strike a good balance between generational secular growers (like those within the U.S. tech scene) and undervalued dividend plays that many in the market may be sleeping on. Indeed, only time will tell what’s to happen to the tech and artificial intelligence (AI) trade as it lifts the Nasdaq 100 to greater highs.

Regardless, there’s plenty of value on both sides of the border that doesn’t require you to place a bet on a technology that you can’t pronounce, let alone understand!

Should investors consider options in the U.S. markets amid the rally?

Understandably, valuations may be a tad on the high end when looking at the S&P 500. But can a stock really be dubbed as overvalued if the price-to-earnings (P/E) ratio is slightly swollen if earnings have the potential to accelerate to a rate to provide meaningful multiple compression in the future?

Either way, investors should focus on the value they’ll receive from every potential buy. Without further ado, here are two dividend plays that I find to be undervalued.

McDonald’s

McDonald’s (NYSE:MCD) stock has been in a world of pain in recent weeks following the release of some meagre quarterly earnings. Remember when McDonald’s stock used to be a resilient defensive that could fare well, even benefit, from a cooling off of the world economy?

Well, it turns out inflation has gone out of control such that even the pricing power of McDonald’s has been challenged. Recent price hikes may have gone too far, with lower-income customers opting to forego the legendary fast-food chain in favour of some higher-value offerings. Even with higher prices at the grocery store, making your own food from scratch is still cheaper, at least for now.

Personally, I think the recent slip in MCD stock is a magnificent buying opportunity. Why? Better prices are likely coming, perhaps far better prices than some of its rivals in the fast-food space.

Remember, McDonald’s isn’t the only fast-food company that’s been a tad pricy to eat at of late. As fast food is hit with a bit of disinflation, look for McDonald’s to shine again versus rivals. With a nice 2.36% dividend yield and a modest 24.59 times trailing P/E multiple, the stock is on the value menu this March, folks!

Restaurant Brands International

Restaurant Brands International (TSX:QSR) is another fast-food firm that stands to benefit as input costs cool and lower-income consumers rediscover the value to be had in the big chains. The firm behind Burger King, Popeyes Louisiana Kitchen, Tim Hortons, and Firehouse Subs could prove severely underpriced right now, even as shares look to make new all-time highs.

With a good amount of momentum, a solid dividend (2.84% yield, more than McDonald’s), and a low 21.38 times trailing P/E, QSR stock seems to be in a sweet spot for Canadian investors!

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 has positions in McDonald's and Restaurant Brands International. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

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