QSR: A Juicy 3.7% Dividend With Burger King Growth Potential!

The fast-food giant Restaurant Brands International (QSR) is serving up a mouthwatering combination of income and growth—perfect for investors craving stability with a side of upside. Let's dig into why this stock is a compelling buy right now, especially with its 3.7% dividend yield, strategic expansion plans, and a valuation that's way below its peers.

The Dividend Deal: A 3.7% Yield With Room to Grow

QSR's dividend yield of 3.7% is a steal compared to the paltry 0.97% average in the consumer cyclical sector. That's not a typo—the company is paying out nearly four times more than its peers! And here's the kicker: this dividend is backed by solid fundamentals.

The payout ratio is 80% of earnings, which is well within a sustainable range (under the 85% threshold I've always preached). Even though the cash flow payout ratio hits 100%, the company's strong earnings suggest it can cover distributions comfortably. Plus, analysts are forecasting a future yield of 4.4%—meaning this dividend could get even juicier.

Growth on the Grill: 8%+ Operating Income and Strategic Moves

While QSR's Q2 2025 operating income growth isn't yet reported, CEO Josh Kobza has already hinted at “encouraging momentum” for the quarter. And let's not forget the company's 8%+ organic Adjusted Operating Income (AOI) growth target for 2025, a goal that's been on track thanks to disciplined expansion.

The secret sauce? Strategic moves like Tim Hortons' global push and Burger King's menu innovation. Both brands are expanding aggressively in high-growth markets like China and the Middle East. Meanwhile, QSR's franchise model—where 93% of locations are owned by third parties—keeps capital expenditures low while generating steady royalty streams.

Debt? Don't Sweat the Fries

Critics will point to QSR's $12.7 billion in debt as a risk. But here's why it's manageable:
- Cash flow: Despite the 100% payout ratio, the company's $4.3 billion in operating cash flow (TTM) gives it breathing room.
- Valuation: QSR trades at just 20x earnings, a 30% discount to rivals like Starbucks (SBUX) at 29x. This means the market is undervaluing its cash-generating power.
- Dividend stability: Even if cash flow dips slightly, earnings are strong enough to sustain payouts.

Why Buy Now? The Ex-Dividend Date is June 24

Investors have a golden window to get in on this deal: Buy QSR before June 24 to lock in the next dividend payment of C$0.86 per share, payable on July 8. This isn't just about the dividend—it's about getting in at a valuation that's been beaten down unfairly.

Historical backtesting from 2020 to 2025, however, reveals that a strategy of buying before ex-dividend dates and holding until the next one underperformed, yielding a compound annual growth rate (CAGR) of 5.50% with an excess return of -76.02% and a Sharpe ratio of 0.22. This underscores the limited risk-adjusted returns from such timing, emphasizing that the dividend's income stream—not short-term price swings—remains the core value proposition here.

Risks? Sure, but the Sizzle Outweighs the Burn

• Cash flow volatility: If global sales slow, the 100% cash flow payout ratio could strain dividends.
• Franchise reliance: Over-reliance on franchisees could backfire if they underperform.

But let's be real: QSR's brands are cultural touchstones. Burger King's “Have It Your Way” and Tim Hortons' coffee dominance aren't going anywhere.

Final Bite: A “Buy” With a Side of Growth

QSR is a rare bird: a dividend stalwart with 8%+ growth potential trading at a discount. The 3.7% yield gives investors income now, while expansion in Asia and the Middle East promises long-term gains.

Action Plan:
1. Buy before June 24 to capture the dividend.
2. Hold for the long haul—this isn't a flip.
3. Watch earnings reports to confirm that cash flow stays robust.

This isn't just about burgers and coffee—it's about a balanced portfolio play that delivers both income and growth. Don't miss the next bite of this opportunity!