You may not have heard of Restaurant Brands International (QSR 1.43%), but you probably know at least some of its major brands: Tim Hortons, Burger King, Popeye's Louisiana Kitchen, and Firehouse Subs. This stock has outpaced the S&P 500 during the past year, and the company's commitment to expanding its business and growing its dividend make it well worth considering for a long-term investor's portfolio.
Constant growth and dividends from a proven leader
Restaurant Brands saw its share price increase by 9% over the past year, while the S&P netted a loss of over 12%, showing its resilience to the many headwinds plaguing the market at large. Ongoing initiatives, such as Burger King's "Reclaim the Flame" plan, have supported continued the company's growth. Other initiatives include its "Fuel the Flame" investment plan to provide technological upgrades and training for franchisees as well as the "Royal Reset" strategy for redesigning restaurant locations.
Dividend-minded investors looking for a way to build off a growth strategy and still receive dividends may find a solid choice in Restaurant Brands, which continues to improve its dividend year after year. The company anticipates a total annual dividend payout of about $2.20 for 2023. That amounts to a dividend yield of 3.5% -- greater than what's offered by such competitors as Yum! Brands, owner of KFC, Pizza Hut, and Taco Bell.
Yet, the shares currently trade at a price-to-sales ratio of only 4.5, compared to Yum! Brands' 5.4, and a price-to-earnings ratio of 19.7 versus 28 for Yum! Brands. By these measures, Restaurant Brands looks more reasonably valued.
A focus on community and employees
Investors with a civic or social responsibility mindset may find much to like, too. The "Restaurant Brands for Good" plan includes both eco-friendly sustainability and ways for both franchises and company stores to make a positive community impact.
The three pillars of this initiative include the food, planet, and communities that support the company -- and which, in turn, should receive support from it. Examples include taking steps to reduce greenhouse gas emissions by 2030, improving menu choice, and showcasing transparent nutrition profiles.
Franchise owners and company stores also feature a focus on "attracting, retaining, developing and rewarding top talent." The company emphasizes diversity as a key component in the success of its employee programs.
Risks on the international front
Restaurant Brands faced some exposure during the outset of the Russian invasion of Ukraine, confined entirely to its Burger King brand. The company responded by pulling all corporate support from franchisees in Russia, and so it no longer reports any profits related to those locations. As economic instability flares and subsides worldwide, it is possible similar conflicts could further cause problems for the brand due to its large international reach.
Restaurant Brands still falls far behind industry leader McDonald's, however, in both market capitalization and global footprint. Additional risks shared by both companies include inflation and potential changes in consumer spending, as well as the large marketing expenditures necessary to remain competitive in many worldwide markets that face saturation by companies of all sizes in the restaurant, and especially fast-food, industry. Restaurant Brands, with its multiple global locations, focus on franchisees, and wide selection of menu offerings appears well-positioned to tackle and overcome these risks.
Restaurant Brands has the potential to become a strong component of any growth investment strategy, delivering not just growth in share price but also growing dividends alongside a commitment to local communities and the environment. Investors looking for a stock that grants access to international markets and the fast-food industry can find much value in this company, especially over the long term as its expansion plans and initiatives to revamp operations in many areas come to fruition.
