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This TSX Stock Doesn’t Even Blink in the Face of Rising Inflation

Upwards momentum
Image source: Getty Images

Written by Chris MacDonald at The Motley Fool Canada

The fast food industry in Canada has stable growth. This sector is quite recession-resistant, as people love to dine out even more during difficult times. Thus, these stocks stay quite defensive even during fluctuating and difficult market conditions.

Additionally, most of these stocks on the TSX pay quality dividends to their investors. In today’s article, we will discuss one such stock, Restaurant Brands (TSX:QSR). Let’s see how reliable this restaurant stock is in the face of rising inflation.

A blue-chip stock that offers stable and quality dividends 

Restaurant Brands is one of the most popular dividends as well as growth stocks in Canada. It is one of the largest QSR brands in India and has a market cap of $31 billion. The restaurant empire has 28,000 restaurants spread over 100 countries all over the world.

QSR currently has a forward dividend yield of 3.65%, and its current dividend yield is 3.2%, which is still higher than its peers. It has a dividend payout ratio of 81.7%. Along with stable dividends, the stock also offers long-term returns.

Impressively, QSR has consistently increased its dividend over the past five years, which makes it an attractive investment opportunity for long-term investors.

Adding to the list of its advantages is its buyback of shares option. The company has recently received approval to buy back $1 billion in shares over the course of the coming two years. You can tell that the company firmly believes in its future growth.

Travelodge to shake hands with Popeyes and open drive-thru hotel

Travelodge has already signed deals with Aldi, Waitrose, Co-op, Starbucks, Greggs, and Green Hill Pubs to open over 300 hotels. The company is looking to work with approximately 220 local authorities, which will help them “stimulate regeneration” in the UK.

The latest addition to their acquisition strategy is the US fast food restaurant Popeyes, owned by QSR. Through this deal, the lodging company aims to bring a drive-thru hotel to the Northampton Sixfields site. This partnership is expected to bring about 9,000 jobs.

How was Restaurant Brands’ Q2 performance? 

The Restaurant Brands declared its Q2 financial results back in August 2023. Restaurant Brands reported consolidated growth of 9.6% in comparable sales. It also reported total revenue worth $1.8 billion, which is an increase from $1.6 billion from the previous year. Additionally, its EBITDA also increased to $665 million from the previous year’s $618 million.

These are the kinds of growth numbers investors want to see, and it’s the key reason why shares of QSR stock continue to trend in the right direction, particularly in the face of rising inflation.

Bottom line

Restaurant Brands had quite a hit during the pandemic. But if you look at its values now, it has recovered quite impressively. With its dividend payment record and excellent growth opportunities, this defensive stock is a must-have in your portfolio.

The post This TSX Stock Doesn’t Even Blink in the Face of Rising Inflation appeared first on The Motley Fool Canada.

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Fool contributor Chris MacDonald has positions in Restaurant Brands International. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

2023