2 Defensive Dividend Growth Stocks to Buy and Hold Forever

Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock is an intriguing dividend growth bargain for those fearful of an economic slowdown in 2022.

| More on:

Dividend growth stocks are among the best types of investments for younger investors who have decades to hold. In this piece, we’ll have a closer look at two that are going through an intriguing, albeit bumpy, transition. Consider shares of Restaurant Brands International (TSX:QSR)(NYSE:QSR) and Alimentation Couche-Tard (TSX:ATD), two of my favourite Canadian dividend growers with durable, predictable, and growthy businesses.

Restaurant Brands International

Restaurant Brands is a business that’s built for the long haul. The three brands under the QSR umbrella are under a bit of pressure these days. Tim Hortons, Burger King, and Popeye’s Louisiana Kitchen are some of the most cherished fast-food firms in the space, but the COVID pandemic, labour woes, and inflationary pressures have made for quite the ugly backdrop.

Undoubtedly, the most underwhelming part of QSR is that it’s fallen behind some of its peers in the quick-serve restaurant scene. While management isn’t best-in-breed in my opinion, I do think the power of each one of the firm’s brands will shine through at the end of the day. For that reason, QSR stock is an enticing buy on the dip, even if we’re due for a BA.2 Omicron resurgence that could cause dining room closures in the future.

It’s easy to slam Restaurant Brands for its weak performance over the past five years. But billionaire investor Bill Ackman is still a believer. With three great brands (and now a fourth in Firehouse Subs) for one low price, QSR stock is an enticing dividend deal that’s too good to pass up.

Arguably, QSR has the most upside once pandemic headwinds fade. Further, the firm’s relentless spending on technological initiatives should finally begin to pay dividends. At writing, QSR stock goes for $73 and change per share, alongside a dividend yield just shy of 3.8%.

The stock is stuck in a rut. And it’s unclear how it’ll rise out. In any case, I do view fast-food firms like QSR as resilient in the face of recessions. With the yield curve inverting last week, defensive investors ought to give QSR a second look before it has a chance to rally on the back of a rotation back into risk-off value plays. Of all the fast-food firms today, QSR stock looks to be one of the cheaper in the batch!

Alimentation Couche-Tard

Couche-Tard is a convenience store operator that could get active on the acquisition front again. It has a considerable amount of cash on the balance sheet, but its takeover attempts have gone quite sour of late. French grocer Carrefour and Caltex Australia flopped, and Couche could face greater resistance from national regulators moving forward if it’s looking for an elephant, especially amid COVID.

Undoubtedly, French regulators didn’t like the fact that one of its big grocers was being acquired amid a crisis. Could it change its mind in the future? Possibly. In any case, don’t expect Couche to chase if the price isn’t right. It’s all about creating value, not news for the stock price.

Even if Couche doesn’t buy an elephant, it could acquire numerous tuck-in plays. Of course, it could use a nice foundation to break into new geographies. In any case, we’ll have to wait and see what the firm does next. At new highs, I still view the c-store kingpin as dirt-cheap. At 17.6 times trailing earnings, ATD stock looks like a bargain hiding in plain sight on the TSX.

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 Joey Frenette owns Alimentation Couche-Tard Inc. and Restaurant Brands International Inc. The Motley Fool owns and recommends Alimentation Couche-Tard Inc. The Motley Fool recommends Restaurant Brands International Inc.

More on Stocks for Beginners

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Stocks for Beginners

2 Top TSX Growth Stocks to Stash in a TFSA for Life

These two growth stocks may not be the top in the last month, but in the last few years, they…

Read more »

people relax on mountain ledge
Dividend Stocks

Invest $10,000 in This Dividend Stock for a Potential $4,781.70 in Total Returns

A dividend stock doesn't have to be risky, or without growth. And in the case of this one, the growth…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Turn a $15,000 TFSA Into $171,000

$15,000 may not seem like a lot, but over time that amount can balloon into serious cash.

Read more »

A worker uses a double monitor computer screen in an office.
Stocks for Beginners

Why I’d Buy Fairfax Financial Stock Even at Today’s Prices

Fairfax stock just keeps edging higher. But is it now too expensive, or can investors just look forward to even…

Read more »