Whenever a Canadian stock falls on the Toronto Stock Exchange due to a bear market, you must be ready to grab this opportunity to buy such a stock at a dip. However, it may be a concern when the firm is on the descent. Either way, you can earn dividends if you buy and hold such stocks long term. One such stock to invest in right now is Restaurant Brands (TSX: QSR), a stock that’s down 8% over the past month.
Here’s why I think this stock is a “buy the dip” opportunity, despite broader market concerns that the company’s heyday may be behind it.
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Why Restaurant Brands still looks magnificent
The parent company of globally recognized fast-food giants Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and, more recently, Firehouse Subs, Restaurant Brands is a beacon of cash flow stability. With a majority franchise-driven model for its 30,000 locations around the world, Restaurant Brands benefits not only from banner diversification but geographical diversification as well.
On that point, it’s Restaurant Brands’s growing presence in key high-growth emerging markets that has most growth investors excited. The company has aggressively pursued expansion in key Asian markets, seeing growing market share in emerging economies where fast-food consumption is rising.
Furthermore, Restaurant Brands’s extensive footprint extends into more than 100 countries. Its global presence mitigates regional risks and provides exposure to high-growth markets such as Asia and Latin America.
Compelling dividend growth
Aside from the company’s growth prospects, there are reasons why dividend investors continue to focus on this company, and its reliable and growing dividend. Restaurant Brands has consistently increased its dividend payout, reflecting confidence in its future cash flow generation. With a current yield of around 4%, Restaurant Brands International offers an attractive income stream for long-term holders.
Furthermore, the dividend growth of QSR is supported by its strong cash flows and disciplined cost management. As the company expands its operations and efficiency, investors can expect dividend growth to remain a priority.
Long-term growth ahead
Restaurant Brands’s management team has laid out ambitious growth plans, including expanding the footprint of its core brands, accelerating digital transformation, and introducing menu innovations. These initiatives are aimed at driving sustainable revenue growth and enhancing profitability. Moreover, the company’s ability to adapt to changing consumer preferences, such as increased demand for delivery and mobile ordering, underscores its resilience and forward-thinking approach.
I think this is a fast-food giant that will continue to battle various headwinds in the years to come in its core markets (most notably the rise of GLP-1 drugs). However, the company’s growing footprint in emerging markets could provide the growth that offsets any material short-term losses we see as a result of these trends closer to home.
Over the long term, I think this is a company with a sustainable growth model that shouldn’t be overlooked right now.
