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Restaurant Brands may not be firing on all cylinders, but it’s still a fast-food juggernaut.

Fred Lum/the Globe and Mail

Dividend investing suits my lazy personality. Rather than trying to trade my way to wealth – which takes time, creates stress and doesn’t necessarily even work – I just sit back and collect my dividends.

Lately, however, I’ve been a little too lazy. Instead of reinvesting my dividends – one of the keys to a successful investing plan – I’ve been letting money build up for months in my model Yield Hog Dividend Growth Portfolio. Now that I’ve accumulated more than $2,100 of virtual cash, it’s time to go shopping.

Buying great companies whose shares have suffered a setback is a proven investing strategy, which is why today I’m using more than half of my model portfolio’s cash balance to purchase an additional 15 shares of Restaurant Brands International Inc. (QSR), bringing my total to 70 shares.

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Why has Restaurant Brands’ stock been plunging? Two words: Tim Hortons. You wouldn’t know it from the perennially long lineups at Canada’s favourite coffee and doughnut chain, but same-store sales slipped 1.4 per cent in the third quarter from a year earlier.

Softer-than-expected demand for iced cappuccinos and lunch wraps was one reason. Another factor was Tims’ new loyalty program, which hurt sales because customers get their next coffee or baked good for free after seven visits.

But here’s the thing: Even as Tims is struggling, Restaurant Brands’ two other chains, Burger King and Popeyes Louisiana Kitchen, are killing it.

Burger King’s same-store sales jumped 4.8 per cent in the third quarter, driven by strong demand for its new meatless offering, the Impossible Whopper. Popeyes’s same-store sales soared 9.7 per cent, thanks to its new fried-chicken sandwich, which was so popular the chain initially couldn’t keep it in stock. After taking the product off its menu in late August to address supply issues, Popeyes brought the sandwich back to U.S. stores on Nov. 3, triggering massive lineups.

Restaurant Brands may not be firing on all cylinders, but it’s still a fast-food juggernaut. During the third quarter, the company’s total systemwide sales surged 8.9 per cent, helped by 5-per-cent growth in the number of restaurants globally. And there’s plenty of store growth to come.

Consider that, in 2010, Burger King had just 800 restaurants in the Asia-Pacific region. Now, it has 3,000 – and counting. Restaurant Brands is hoping for a similar growth trajectory with Popeyes.

“Today, the Popeyes brand has fewer than 120 locations in Asia, and we see enormous potential to build our network there in the coming years,” Restaurant Brands chief executive Jose Cil said on the third-quarter conference call. In addition to expanding Popeyes’s Asian reach, Mr. Cil also sees growth opportunities in Brazil and Spain, “and right here in the U.S.”

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Yet, many investors are focusing less on Restaurant Brands’ global growth potential and more on the weakness at home with Tims. To be sure, Tims has lost momentum in recent years as feuding between the company and its franchisees and growing competition from McDonald’s and other fast-food players has sapped its strength.

Some analysts are even suggesting that the iconic chain needs an infusion of new management. “Do you need to make more fundamental changes there with respect to … maybe broadening the team or who you have in place running the brand?” Sanford C. Bernstein analyst Sara Senatore asked on the conference call.

Mr. Cil responded that he feels “really good about the team that we have in Canada,” but added that the company “is constantly looking for great talent.”

Adding to the intrigue, a few days after the Oct. 28 conference call, Alexandre Macedo, president of Tim Hortons, sold more than US$10-million of Restaurant Brands shares held directly and indirectly, according to The Globe and Mail’s Insider Report.

All of this has taken a toll on Restaurant Brands’ share price. After touching a record high of $105.93 in early September, the shares have skidded about 18.5 per cent, closing Tuesday at $86.37 on the Toronto Stock Exchange.

The silver lining here is that, after such a sharp decline, further downside in the stock may be limited. Another reason I like the stock at current levels is that the yield, which moves in the opposite direction to the price, has climbed to more than 3 per cent, from about 2.5 per cent two months ago. The yield is even more attractive considering that, in recent years, Restaurant Brands has raised its dividend in January or February. I expect to see another increase early in 2020.

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Fixing Tims won’t happen overnight, but in the meantime, I expect that Burger King and Popeyes will continue to deliver solid results. As long as Restaurant Brands sends me a dividend every quarter, and raises it once a year, I’m content to wait for the turnaround at Tims to gain traction.

Disclosure: The author also owns shares of QSR personally.

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