When it comes to future TSX dividend kings, it’s hard not to think about beaten fast food juggernaut International restaurant brands (TSX: QSR) (NYSE: QSR), which not only has an abundant initial dividend yield of 3.3%, but a way to grow it steadily at an above-average rate over the long term.

The business of fast food and quick service restaurants is fairly straightforward.

Without a doubt, they provide a way for investors to get consistent quarterly payments and annual increases, regardless of how the economy at large is doing. As for Burger King and Popeyes Louisiana Kitchen, two of Restaurant Brands’ three main brands, a recession could actually increase (no pun intended) sales and profit growth.

COVID-19 Delivers Left Hook Straight To TSX Dividend King’s Chin

The pandemic was a different beast, however. COVID-19 closures have taken restaurants a massive blow to the chin. Many restaurateurs never saw it coming. For large restaurants with strong balance sheets, the pandemic was not as bad as it could have been. Restaurant Brands was not as nimble as the fast food leaders in 2020. And the nature of its Tim Hortons brand (people don’t normally have coffee delivered to your doorstep) made it difficult for the company to adapt to an era dominated by drive-thru and delivery.

Once this horrific pandemic is over, so will the stocks of Tim Hortons and Restaurant Brands. Meanwhile, the company is investing money in modernization initiatives that should better prepare it for the next pandemic or future resurgence of worrying COVID-19 variants. Restaurant Brands is reinventing Burger King, with new store layouts and a brand new (or should I say old) logo and a list of new and tasty products.

As Burger King and Tim Hortons look to catch up with their industry peers and Popeyes Louisiana Kitchen, the strongest of QSR’s three brands, I think things will improve for stocks of the Canadian dividend growth benchmark. .

What about the evaluation?

At the time of writing, QSR stock is trading at 5.9 times sales and 37.6 times earnings, with a beta of 1.18, which means stocks are just a little more volatile. than the stock markets at large. The valuation seems high, but the impact of the pandemic darkens the real value to be had in the name.

Once you’ve conquered COVID-19, Restaurant Brands seems to me to be one of the fast food games with the greatest advantage. At the same time, I consider the stock to be much less downside risk than some of the more aggressive reopening coins that aren’t ready for more waves of COVID-19 lockdowns.

In addition, I find that many investors underestimate management capabilities. It’s easy to dismiss QSR as the company behind struggling Tim Hortons chains, which have seen brutal same-store sales for some time. But if you think of Tim Hortons as a manager-driven turnaround game that was behind Popeyes’ breakthrough in the industry, only then does it become evident that the QSR action is in fact a seriously under-played game. rated with one of the best safety margins. there in today’s expensive market.

Once the company’s sales get back into high gear, prepare for dividend hikes from the budding TSX dividend king.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .

Foolish contributor Joey frenette owns shares of Restaurant Brands International Inc. The Motley Fool recommends Restaurant Brands International Inc.