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It’s about time we start getting serious about inflation and its insidious impact on your wealth. Undoubtedly, inflation has been far more persistent than many of us could have expected. While I have no idea what inflation’s next move will be, I do think that there’s a real risk that 6%-8% inflation could continue to hurt the wallets of many.

To stomp out inflation is no easy task. With U.S. inflation flirting with the 8% mark and Canadian inflation that could surpass 6% before it peaks, the 9% total return from stocks we’ve grown accustomed to may be barely enough to nudge a profitable return. After an incredible 2021 for broader markets, asking for 9% in total year returns is undoubtedly a big ask. That’s why stock pickers may have the edge over those who are just fine with settling with run-of-the-mill index ETFs or mutual funds.

Can central banks fight off inflation?

Although it’s soothing to hear that central banks are contemplating 50 basis point rate hikes, I think more firepower will be needed to bring inflation back to its target range. To say that inflation has gotten out of hand would be a huge understatement. Given the Fed’s reluctance to sacrifice the economy and employment to bring forth some disinflationary pressures, investors should not be surprised if inflation is still with us a year from now.

Indeed, inflation can be a terrible thing for savers. These days, with 1970s style inflation, the devastating wealth-eroding impact has grown much worse, especially for many young investors who are so used to sub-2% inflation as a result of technological innovation. Indeed, tech is a deflationary force, but it could take time to work its magic. And with inflation as high as it is, there’s not enough time, bringing forth the need for faster and larger rate hikes.

Personally, I would not depend on central banks winning their fight against inflation. Geopolitical turmoil could cause them to stand pat, and that could allow inflation to linger for longer. That’s why cheap, cash-flow-generating dividend stocks are intriguing right now, as growth fades and value sparkles.

Restaurant Brands International Stock

Currently, Restaurant Brands International (TSX:QSR)(NYSE:QSR) is just one intriguing TSX dividend stock that seems too cheap to ignore, given the likelihood that the heavy weight of COVID could go away in the back half of the year.

Undoubtedly, the coronavirus crisis has impacted sales, inducing dining room closures, but for those looking to play the great reopening, I think there are a lot of reasons to get back into the names while they’re down and out. Further, the post-lockdown aftershock of labour woes has also hit the company way too hard. Such pressures should alleviate, but for now, I do think the firm has pricing power to move through yet another year of surging prices across the board.

The company is a fast-food staple, with Burger King, Popeye’s Chicken, Tim Hortons, and Firehouse Subs. With recession risks hogging the headlines, investors should be gravitating toward a durable firm like QSR. If anything, the mix of higher prices and an economic downturn could make fast-food firms with above-average value propositions more appealing again through the eyes of consumers.

At 3.1 times sales, I view QSR stock as a colossal value stock hiding in plain sight. It’s innovating, just like the competition, and such efforts will work their way into the results in due time. In the meantime, the 3.8%-yielding dividend is ready to collect.



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