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3 Dividend Stocks to Buy Hand Over Fist

·4 min read
A worker drinks out of a mug in an office.
A worker drinks out of a mug in an office.

Written by Kay Ng at The Motley Fool Canada

Here are three dividend stocks that could do well over the next few years. Two businesses released their earnings results on Thursday and rallied up to 9%.

Saputo stock released its earnings results and popped 9%

Saputo (TSX:SAP) reported its fiscal first-quarter (Q1) 2023 results on Thursday. It experienced a heck of a rebound in results. Here are the key highlights compared to fiscal Q1 2022:

  • Revenue growth of 24.1% to $4,327 million

  • Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a cash flow proxy, growth of 19.7% to $347 million

  • Net earnings jumped 162% to $139 million

  • Earnings per share (EPS) increased 154% to $0.33

  • Adjusted net earnings rose 32% to $161 million

  • Adjusted EPS increased 34% to $0.39

The dividend stock reacted with a 9% rally yesterday. The Saputo CEO sounded very positive, suggesting that the stock could experience greater gains through the year.

“We’re off to a strong start to the year. The combination of our pricing actions, productivity improvements, and cost containment initiatives mitigated the impact of inflationary pressures in the first quarter. As input costs stabilize and price realization and efficiencies continue, this should result in further recovery for the balance of the year, with progress on margins and adjusted EBITDA.

While the external environment has required a laser focus on short-term execution, we continue to lay the groundwork for our next chapter of sustained growth and we will continue to deploy our time and resources to our Global Strategic Plan, keeping a view on maximizing long-term value creation.”

Lino A. Saputo, chair of the board, president and CEO

Should Saputo be able to contain costs, raise prices, and improve efficiency, the stock could continue trending higher to at least the $41 level for upside of more than 20%. It also pays a dividend yield of 2.1% to add icing to the cake.

Restaurant Brands stock rallied 7%

Restaurant Brands International (TSX:QSR)(NYSE:QSR) also reported its Q2 earnings results yesterday, which drove a 7% rally in the dividend stock.

Here are the key highlights compared to Q2 2021:

  • Global system-wide sales grew 14% to over US$10 billion

  • Consolidated comparable sales was 9.0%, driven by 12% at Tim Hortons and 10% by Burger King

  • Revenue growth of 14% to US$1.6 billion

  • Adjusted EBITDA growth of 7.1% to US$618 million

  • Adjusted EPS growth of 6.5% to US$0.82

Restaurant Brands is a capital-light business. For example, in the past two years, it used only 8.4% of its operating cash flow for capital spending with over US$2.4 billion of free cash flow left over. Its last-12-month free cash flow (FCF) generation was US$1,562 million, up 16% from a year ago. In this period, it used 61% of its FCF for dividend payments.

Newmont

Commodity stocks can be super volatile and risky. Who would have thought that Newmont (TSX:NGT)(NYSE:NEM) stock would hit a high of almost $109 per share in April and fall to a rock bottom of about $58 — roughly 47% lower?

No one wants gold stocks right now. So, it could be a good time to buy some shares in the gold miner. It is not a buy-and-hold dividend stock. Investors should aim to buy low (such as now) and sell high (when the market bids it up again). That said, currently, Newmont does pay a dividend yield of close to 4.9%. On a turnaround, it could hit at least $80 per share, but investors would need to bear high risk.

The post 3 Dividend Stocks to Buy Hand Over Fist appeared first on The Motley Fool Canada.

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Fool contributor Kay Ng owns shares in Restaurant Brands International Inc. and Saputo. The Motley Fool recommends Restaurant Brands International Inc.

2022