Canadian income investors interested in getting a great deal in the TSX bargain bin before the year comes to a close might wish to check in on some of the underperforming dividend players. Undoubtedly, the TSX Index is poised to cap off one of its best years (especially relative to the S&P 500) in an incredibly long time.
With recent tech volatility holding the U.S. market indices back, while the TSX Index continues moving ahead, I think that the Canadian market is worth sticking with as the tech-heavy U.S. market looks to digest its richer valuations for a while longer. Whether 2026 will be another year that the TSX Index beats the S&P 500 will be the big question. Ultimately, it depends on how well the tech trade fares.
Personally, I wouldn’t bet against the TSX, especially as value and growth beyond the tech sector become more important to investors, many of whom may not want to be sitting around in the blast zone once some sort of big AI spillover (yes, maybe even a big bursting of the AI bubble) finally does happen.
In any case, cheap dividend payers seem like a far safer bet as we end off a strong year. And while buying relative underperformers might not seem like a winning strategy, I think an exception can be made for the following name, which, I think, is not guaranteed to stay cheap for all too long, especially if a great rotation to value ends up happening in the new year.
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Restaurant Brands International
Restaurant Brands International (TSX:QSR) stands out as one of the more premier names in the Canadian markets these days. After enjoying a robust rally off those September depths, shares have dipped close to 5% on seemingly no big news. Undoubtedly, the latest quarter saw the fast-food juggernaut exhibit some serious strength in an industry environment that’s not exactly red-hot.
When you consider all of the major fumbles across the quick-serve restaurant scene (how many fast-food stocks are in a bear market right now?), I’d argue that Restaurant Brands’s latest quarterly result ought to be treated with far more respect. Arguably, I thought the results were good enough to power QSR shares right back to new highs.
Either way, here we are at another checkpoint, with shares going for $96 and change. With a 3.58% dividend yield, a low 0.61 beta (which means less correlation to movements made in the broad markets), and plenty of sales momentum to get behind, I think the latest dip (which amounts to half of a correction) is more than buyable.
Tim Hortons, in particular, is finally starting to get things right, and as its other big banners (most notably Burger King and Popeyes Louisiana Kitchen) start picking up traction amid its expansion, I see the potential for next-level dividend growth in the new year. In short, Restaurant Brands is back, and it’s doing relatively well in a fast-food world that’s under serious pressure. If you seek resilience, defensiveness, and relative outperformance, I’d look no further than this premier name this holiday season!
