One of our best-performing stocks is Domino’s Pizza. We would like to extend our investing into the restaurant sector, so Restaurant Brands International Inc. (QSR) looks like an excellent candidate. QSR is a 100% franchise model throughout its three brands: Tim Hortons, Burger King, and Popeyes. We always stop at Tim Hortons on our out-of-town trips for coffee, maple pecan Danish, and Iced Capp blended frozen coffee. Timbits are a sweet addition to any party, and both adults and kids enjoy them. I love Iced Capp creamed coffee with cookies. And, in my opinion, Tim Hortons coffee is the best among its competitors.

That’s why we like Tim Hortons, but we cannot say the same for Burger King or Popeyes. The numbers in the next paragraph will explain.

Readers who are unfamiliar with our process of choosing dividend stocks can read about it here.

Future QSR Dividend Yield

The current QSR dividend yield is about 3%. That is not high, but let’s review dividend hikes over the last three years. They started paying dividends three years ago, and the dividend increases have been impressive. QSR increased the dividends for two years in a row by 70% and 25%. That amounts to a 48% average increase over the last three years.
If you start with 3% dividends and they increase by 48% every year, after ten years you will receive more dividends annually than you invested.

After five years you will receive 15% dividends. That’s incredible. After ten years you will receive 102% dividends. If you invest 10,000 CAD today and the rate of dividend increase remains at 48% annually, after ten years you would receive only 10,988 CAD in annual dividends. Long-term investment in a good company will produce incredible returns.

The average dividend payout ratio over the last three years is 53%, which makes dividends a pretty safe investment (i.e., without increasing earnings, the company will be able to increase dividends by 47%). I am confident QSR will continue to increase its earnings over time.

It is not clear if the company will be able to keep the same high rate of dividend increases, but it is worth the investment even if the increases revert to a slower rate.

Earnings Per Share (EPS) Growth

Earnings per share (EPS) grew at a rate of 54% annually in the last three years, supporting dividend increases. The fast food and restaurant sectors are highly competitive but, based on past performances, our preference to select Tim Hortons and, most importantly, financial valuations, make us feel confident about this investment.

We have our own simple method of selecting dividend stocks, but it is also useful to know what others think about the company, so here are some of those views:

• Morningstar rated QSR 4 stars, which is only one below its highest rating.
• QSR is among the holdings of Berkshire Hathaway, Warren Buffett’s company.
• Rob from passivecanadianincome.ca also thinks QSR looks promising, and he added more insight into Burger King in his post.

On September 13, we bought 85 QSR shares at $58.55 per share. Because we had capital in United States dollars (USD), we bought QSR shares trading on the New York Stock Exchange in our non-registered USD account. Investing US dollars in Canadian companies is an option because they provide a tax shelter. Because QSR рауs eligible dіvіdеndѕ, it may reside in non-registered accounts. More information can be found about where to hold your dividend-paying companies in RRSP, RESP, TFSA Or Unregistered Account.

Eighty-five shares will gain dividends of $38.25 quarterly, which is insufficient to buy one more share upon distribution. Therefore, we will have to buy about fifty more shares to DRIP one share on every dividend received. We will definitely do that because we love compound interest and its implementation using DRIP.

PS: My fishing trips have become more productive because, in addition to seeing Canadian National Railway locomotives generating revenues while I am fishing, stopping at Tim Hortons on our way to fishing helps our passive income streams. I will have to drive my friends to Burger King next time we go fishing. And we should probably stop at Chevron service stations to contribute to the energy investments in our dividend portfolio. I already caught two king salmon at the beginning of 2018 fishing season.