Looking to diversify portfolio with food&restaurants industry, MTY vs A&W?

Food&restaurants seems to be a good opportunity these days, almost every companies pulled back a little lately due to Covid restrictions. About MTY & A&W, they seem both solid companies (from the outside) but definitely with different approaches. Looking at your stock reports, I feel MTY would be more a safe “covid play” right now while A&W would provide dividends for the long term but without growth (grade 0.8, so wondering how reliable it could be as well).
Your thoughts, or should I look somewhere else?

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Asked on January 19, 2021 6:15 pm

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Ouf - tough call here.

Restaurants are struggling quite a bit, especially here in Canada in which Provinces are facing many different types of lockdowns that impacts each Province a little differently. One of the reasons why i like A&W over MTY in this environment is because it has many standalone, drive-through locations. MTY has many mall-based stores (A&W has those as well) and I think this makes it a little more vulnerable. Granted both could do quite well on the other side. Worth noting both suspended the dividend at the peak of the pandemic. A&W has since re-instated, but MTY has not.

Have you had a look at QSR which is on our Bull List? The parent company for Tim's, Burger Kind and Popeyes. The latter's cult like status is pulling up the slack for Tim's and is even better positioned that either MTY and A&W to navigate the COVID environment. As a global company, there are plenty of avenues for growth as well. To top things off, it did not suspend the dividend and remains a Canadian Dividend Aristocrat.

Mat

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Posted by Mathieu Litalien

Answered on January 19, 2021 6:35 pm

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