Is Restaurant Brands International Stock a Buy for its 3% Dividend?

Here’s a look at whether or not Restaurant Brands International stock is a buy right now.

| More on:
Investor wonders if it's safe to buy stocks now

Source: Getty Images

Some of the best investments to buy are ones that can provide a recurring revenue stream and handsome growth potential — even more so if the stock offers a juicy, secure dividend, which can help make almost any stock a buy.

One perfect example is Restaurant Brands International (TSX:QSR). Here’s a look at whether or not Restaurant Brands International stock is a buy right now.

Meet Restaurant Brands International

Restaurant Brands International is the name behind some of the largest quick-serve brands on the market. This includes Burger King, Tim Hortons, Popeyes, and Firehouse Subs.

Collectively, the company operates over 30,000 restaurants across 120 countries, making it a true global icon. Another key point is the often-dismissed diversified appeal of those brands. Each represents different tastes with unique menus and insane expansion potential.

Some of that growth includes the rapid expansion of the Tim Hortons brand internationally to new markets such as China. In fact, Restaurant Brands boasts over 900 stores across 71 cities in China.

Tim Hortons isn’t the only brand boasting strong growth in China. Earlier this summer, Restaurant Brands acquired Popeyes’s China business, which includes over a dozen stores.

That growth potential alone makes the stock a buy, but there’s much more to love about Restaurant Brands.

Let’s talk results

As of the time of writing, Restaurant Brands trades just shy of $100, somewhat in the middle of its 52-week range. Year to date, the stock trades down nearly 6%, but this quickly turns into the black over longer periods, with the one-year and five-year returns sitting at 6.7% and 14.56%, respectively.

If anything, that slump in stock price represents an intriguing time for prospective investors to grab a position in Restaurant Brands at a sub-$100 level.

In terms of quarterly updates, Restaurant Brands is set to report on the third fiscal next week. Until then, we can look back at the second-quarter results.

In the second quarter, Restaurant Brands reported income from operations of US$663 million, reflecting an increase over the US$554 million reported in the same period last year. The company saw system-wide sales register a 5% bump year over year, while restaurant growth saw a 4% uptick.

Overall, Restaurant brands reported net income of US$399 million, or US$0.88 per diluted share, in the quarter. This was a noted improvement over the US$351 million, or US$0.77 per diluted share, in the prior period.

Is the stock a buy right now?

Restaurant Brands has many positive takeaways. The company is coping well, if not better than many of its peers, when it comes to shrinking margins stemming from the rising costs we’ve seen over the past few years.

The company has also taken an aggressive stance on growth, with both international expansion of its brands and renovations to existing stores taking priority.

Another key point to note is Restaurant Brands’s dividend. The 3.22% yield isn’t the best return on the market, but it is covered, growing and, in my opinion, a worthy addition to any well-diversified portfolio.

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 Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 5.5 Percent Dividend Stock Pays Cash Every Month

This defensive retail REIT could be your ticket to high monthly income.

Read more »

Confused person shrugging
Dividend Stocks

Passive Income: How Much Do You Need to Invest to Make $600 Per Month?

Do you want passive income coming in every single month? Here's how to make it and a top dividend ETF…

Read more »

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »