There are plenty of options for investors to pursue in this market environment, regardless of their risk profile and financial standing. For those looking to take a more passive approach to investing, a range of exchange traded funds (ETFs) can be a great place to start. However, plenty of investors like to do their own research and buy individual companies. In doing so, it’s entirely possible to beat the market return over time – so long as investors pick the right companies.
For stock pickers looking to put new capital to work in this market, here is one of my top picks to consider right now.
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Restaurant Brands
Restaurant Brands (TSX: QSR) is best known as the parent company of Tim Horton’s in Canada, but also owns a number of other world-class fast food banners such as Burger King and Popeye’s, which operate mostly in the U.S. and other international markets.
My forward outlook for the dining sector is that we will see trade-down toward value options accelerate in the years to come. The reality is that the longer inflation remains higher, the less folks will choose to eat out. While that may, at first glance, create concern among some investors considering a company like Restaurant Brands, I’d recommend investors consider the reality that a majority of the folks that may be pulling back will still want to eat away from home from time to time throughout the year.
For those looking to do so, I think the lower-priced options Restaurant Brands provides via its numerous banners will become more enticing. In such a scenario where we see either higher inflation, higher layoffs (meaning greater weakness in the jobs market) or a full-blown recession, QSR stock is one I think has the potential to actually trend higher.
That’s a growth thesis worth considering.
Don’t forget about total returns
In addition to a strong underlying growth profile, one of the other key factors I pay close attention to with Restaurant Brands is the company’s dividend yield. Indeed, this is a top-tier dividend stock I expect to continue to raise its distributions for years and decades to come.
That’s due in part to the company’s rock-solid cash flow profile, and its solid balance sheet. Indeed, if we do see a market-wide downturn, which takes valuations in the quick service restaurant industry lower, this is a company I think can acquire its way back to growth as a last resort.
Thus, for investors looking for a 3.7% dividend yield that is well-covered and should grow over time, this is a top option to do so.
In short, I expect to see low double-digit total returns over the long haul with Restaurant Brands. This is a stock that may not be booming now. But if the market declines or we see some chop for an extended period of time (my base case at this point), Restaurant Brands is a stock to own right now.
