Many investors are on the lookout for defensive dividend growth stocks worth holding for the long term. Indeed, companies that have the ability (and willingness) to pay out higher dividends over time are worth considering. That’s because these companies generally have strong cash flow growth driven by underlying business models that are inherently defensive.
For those who remain cautious given amplified volatility in the markets of late, finding such defensive dividend stocks may be of outsized importance. Here are three top TSX-listed companies I think are worth doing some additional research on right now.
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Restaurant Brands
Restaurant Brands (TSX: QSR) is one of the world’s largest quick-service restaurant companies. Headquartered in Canada, Restaurant Brands is an absolute behemoth, operating under the Tim Horton’s, Popeye’s Louisiana Kitchen, Firehouse Subs, and Burger King banners.
With a business that’s inherently defensive (those looking to dine out may increasingly choose to do so at lower-priced locations), this is a company that’s relatively recession-resistant. But in bull markets, Restaurant Brands has also shown the ability to outperform. The company recently brought in sales of more than $40 billion over the past years, operating more than 31,000 restaurants in 100 countries across the world.
Restaurant Brands continues to drive digital innovation, focusing on exceptional guest experiences. Notably, QSR stock has offered approximately 550% returns to its shareholders from 2012. That’s an impressive growth rate, driven by strong bottom-line growth over time. This earnings growth allows the company to reinvest the profit and expand its operations.
Restaurant Brands is an established player in a mature market. The company aims for more than 3% growth in comparable sales and 5% in units by the end of 2028. Moreover, the company plans for system-wide sales growth of 8% and adjusted operating income of 8% over the same period.
Thus, for investors looking for a mix of dividend income and strong long-term growth, Restaurant Brands is a top option to consider in my view.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is a retail company operating a convenience store network in North America and Europe. The company is known for its gas stations and convenience stores with clean and inviting interiors. Growing via an acquisition-first model, Couche-Tard has grown its footprint consistently, while at the same time improving its organic growth metrics. This has led to the stock chart investors can see below.
Operating more than 16,700 stores in North America and Europe, Couche-Tard has shown impressive resilience and growth over the years. As far as pound-the-table stocks are concerned, this remains one of my top long-term picks. And while the company’s valuation multiple has certainly increased of late as investors largely recognize the company’s growth potential, at 21 times earnings, this stock appears to be fairly priced.
I think the company could see much more upside over time, as it continues to reinvest in its core business and expansion efforts. This is a company operating in a very defensive sector of the market. Until we all stop commuting and picking up a snack on a road trip, Couche-Tard will continue to provide steady long-term growth.
