The Power of Compound Returns: Why Starting Today Still Makes Sense

Compounding is the best kept non-secret out there, so here’s why investors should start today.

| More on:
A plant grows from coins.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Compounding returns are one of the most powerful forces in investing, once referred to as the “eighth wonder of the world” by Albert Einstein. This concept is simple yet incredibly effective. When you invest, your money earns returns not just on the initial amount you put in but also on the returns that accumulate over time. The earlier you start, the bigger and more fruitful your financial forest becomes over time. If you wait too long, you miss out on those extra years of growth, which can make a substantial difference in the long term.

Created with Highcharts 11.4.3Restaurant Brands International PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Start now with QSR

Starting today is the best decision you can make for your financial future. Time is the single most critical factor in maximizing compounding returns. Even small amounts invested consistently can snowball into significant sums when given enough time. For instance, investing $500 a month at a modest annual return of 7% can grow to over $120,000 in 10 years. Yet, if you start five years later, you’d only have about $60,000. That’s why there’s no better time than now to begin your journey to financial freedom.

Restaurant Brands International (TSX:QSR), the parent company of Burger King, Tim Hortons, and Popeyes, is a compelling choice for anyone looking to harness the power of compounding returns. QSR has consistently proven itself to be a resilient and profitable company, leveraging its strong brand portfolio and global reach to deliver value to investors. For example, in its most recent quarterly report for the third quarter (Q3) of 2024, QSR posted $7.93 billion in trailing 12-month revenue, a 24.7% increase in quarterly revenue growth year over year. With a profit margin of 16.01% and an operating margin of 27.41%, QSR has maintained strong financial health, positioning itself for long-term success.

Over the years, QSR demonstrated steady growth. Its five-year earnings growth rate is an impressive 14.4%, and in the past year alone, earnings growth accelerated to 18.1%. For instance, Popeyes continues to expand internationally, fuelled by the runaway success of its chicken sandwich. This created a viral sensation and a massive surge in sales.

Future outlook

Looking ahead, QSR has ambitious growth plans. The dividend stock aims to expand its global footprint to 40,000 restaurants and increase system-wide sales to $60 billion by 2028. Plus, it has set a target of $3.2 billion in adjusted operating income over the same period. From an investment perspective, QSR offers the perfect mix of growth and income potential. The dividend stock pays an annual dividend of $3.34, yielding 3.75% at current prices. Reinvesting these dividends can supercharge the compounding effect, as each payout allows you to purchase more shares. Over time, this cycle can lead to exponential growth in your investment.

The recent performance also highlights QSR’s resilience. In the second quarter of 2024, the company reported a net income of $399 million, or $0.88 per share, exceeding analysts’ expectations. However, like any investment, QSR is not without risks. The company’s high debt-to-equity ratio of 316.99% is worth monitoring, though it has been effectively managing its obligations thus far.

Bottom line

While no investment is ever a guarantee, the combination of QSR’s historical performance, future growth outlook, and dividend potential makes it a strong dividend stock for long-term investors. The key to maximizing returns, however, lies in starting today. The earlier you invest, the longer you have to take advantage of compounding returns. Whether you’re reinvesting dividends or enjoying the steady growth of your portfolio, time is your greatest ally.

Compounding returns are the cornerstone of wealth creation, and the earlier you begin, the greater your rewards. QSR offers a unique opportunity to capitalize on this principle with its proven track record, growth plans, and reliable dividends. By investing in a company like QSR today, you’re not just buying into a dividend stock. You’re planting a financial seed that can grow and thrive for years to come.

Should you invest $1,000 in Restaurant Brands International right now?

Before you buy stock in Restaurant Brands International, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Restaurant Brands International wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

dividend growth for passive income
Dividend Stocks

Why I’d Invest in Canadian Value Stocks for Both Stability and Growth

Three Canadian value stocks are buying opportunities for investors looking for stability and growth.

Read more »

investment research
Dividend Stocks

Got $15,000? 3 Blue-Chip Stocks Every Canadian Should Consider

Here's why investing in blue-chip TSX stocks such as CNQ and CNR should derive outsized gains in 2025 and beyond.

Read more »

protect, safe, trust
Dividend Stocks

Where I’d Allocate $20,000 in 2 Safer High-Yield Dividend Stocks for Retirement Needs

Here are two safer, high-yield dividend stocks I'm looking at for my retirement needs.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 Reasons I’m Considering Enbridge Stock for a $5,000 Investment This April

I'm considering Enbridge stock to provide some defensive appeal and a juicy dividend to my long-term portfolio.

Read more »

monthly desk calendar
Dividend Stocks

A 9.2% Dividend Stock Paying Cash Every Single Month

With one of the highest dividends out there, this dividend stock deserves attention in your portfolio.

Read more »

Happy golf player walks the course
Dividend Stocks

Build a Powerful Passive Income Portfolio With Just $20,000

If you are worried that the bear market could reduce your savings, these stocks can build a powerful passive income…

Read more »

Hand Protecting Senior Couple
Dividend Stocks

How I’d Use My $7,000 TFSA Contribution to Start Retirement Planning

These TSX stocks have solid fundamentals and are well-positioned to deliver significant tax-free total returns over time.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

How to Turn Your TFSA Into a Gold Mine Starting With Only $10,000

It doesn't have to be complicated or scary. You can turn any portfolio into a major gold mine.

Read more »