TFSA: 2 Stocks to Create Lasting Generational Wealth
Written by Christopher Liew, CFA at The Motley Fool Canada
The money or assets that a person leaves behind is called generational wealth. An amount handed down to at least one generation is legacy or family wealth. In the Great White North between 2016 and 2026, Willful.co says Canadians will hand down $1 trillion in personal wealth. It would be the largest intergenerational transfer of wealth in history.
A recipient of generational wealth, children or grandchildren, gains a significant financial advantage, although the use is entirely up to them. Building generational wealth means acquiring or investing in assets; stock investing is one way to produce or accumulate wealth. Better still, hold the stocks in a Tax-Free Savings Account (TFSA) for tax-free money growth.
Long-term value creation
Quick-service restaurants are financially stable, but if you’re investing in the fast food industry, Restaurant Brands International (TSX:QSR) or RBI is the logical choice. The $27.7 billion company owns four iconic global brands. Firehouse Subs is the newest in addition to Tim Hortons, Burger King, and Popeyes.
Management believes there’s a huge opportunity to grow following the impressive 8.5% comparable consolidated sales growth last year versus 2021. The rise in delivery and digital sales, menu innovation, and promotion campaigns for the core platforms contributed immensely to the upside.
In 2022, total revenues and net income increased 13.3% and 18.2% year over year to US$6.5 billion and US$1.48 billion, respectively. Outgoing CEO Jose Cil said, “We are focused on being guest-led in everything we do, setting our franchisees up for long-term success and, as a result, setting ourselves, and our shareholders, up for long-term value creation.”
RBI endured the coronavirus crisis in 2020, when Popeyes’ chicken sandwich became the gem of the pandemic. Burger King (19,789) has the most significant number of restaurants as of year-end 2022. The company invested $400 million in the burger chain in 2022 to drive higher quality restaurant enhancements, remodel, and increase advertising firepower.
Increases in commodity, labour, and energy costs partly due to the macroeconomic impact of COVID-19 and the Ukraine War are major challenges to the business. Joshua Kobza, the newly appointed CEO, will implement the future growth plans of RBI and the four iconic brands, and Cil will stay on as a strategic advisor.
If you invest today, the restaurant stock trades at $84.88 per share (-3.07% year to date) and pays a decent 3.63% dividend.
Allied Properties (TSX:AP.UN) owns and operates urban or Class 1 workspaces in Canada’s real estate sector. The $3.3 billion real estate investment trust (REIT) is selling its entire urban data centre (UDC) portfolio and will use the proceeds to retire debt and fund current development projects.
Michael Emory, Allied’s President and CEO, said the sale of the UDC portfolio represents a timely monetization opportunity. Besides supercharging the balance sheet, the REIT could grow the business further in the favoured real estate sector.
The stabilized asset portfolio has over 200 distinctive urban properties. These offices are associated with the traditional TAMI (technology, advertising, media, information) workspaces. At $25.40 per share (+0.25% year to date), you can partake in the juicy 7% dividend yield.
Keep it within the family
Many people want their assets to stay within the immediate family. Canadians have ways to generate enough wealth to secure their family’s financial future. You can save, start a business, invest in real estate, or buy and hold dividend stocks for the long term.
The post TFSA: 2 Stocks to Create Lasting Generational Wealth appeared first on The Motley Fool Canada.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.