As an investor in your 50s, you’re likely looking to grow your nest egg so that it can help support you when you retire. You’re probably also interested in building a passive income stream, ideally one that will grow over time.
Fortunately, well-chosen dividend-growth stocks can help you accomplish both of these goals. And with its powerful wealth-building combination of increasing dividend payouts and share-price appreciation, Texas Roadhouse (NASDAQ:TXRH) is one of the best available in the market today.
Centered around an assortment of specially seasoned steaks that are hand cut daily on the premises and cooked to order over open gas-fired grills, Texas Roadhouse’s fare is earning rave reviews from an increasing number of diners. Industry watchers have also taken note, with Business Insider recently ranking the company as the best chain restaurant in America, based upon financial performance, customer satisfaction, and overall value.
From its humble beginnings as a single restaurant in 1993, Texas Roadhouse now operates 510 restaurants in 49 states and five international countries. Impressively, Texas Roadhouse has funded this expansion almost entirely out of its own operating cash flow, which has helped the company amass a strong balance sheet with nearly $30 million in net cash, while also returning cash to investors in the form of share repurchases and a steadily rising dividend.
At a time when many restaurants are struggling with declining foot traffic and sluggish sales, Texas Roadhouse stands apart as a testament to consistently strong results, including 26 consecutive quarters of positive traffic growth.
Multiple factors are helping to fuel this growth. Perhaps most importantly, Texas Roadhouse’s family friendly menu and atmosphere, with its large-portioned yet value-priced meals and upbeat country music, have proven popular among patrons. Secondly, Texas Roadhouse has carved out a niche for itself in servicing mid-sized suburban markets, which tend to have less competition. Third, Texas Roadhouse’s focus on local community involvement helps to foster customer goodwill, while also serving as a low-cost form of advertising, all of which helps to boost sales and profits.
Long runways for growth
Importantly, Texas Roadhouse has multiple pathways for continued growth. The company still has a nationwide, and increasingly international, expansion opportunity with its core Texas Roadhouse business. (For comparison, Outback steakhouse has more than 750 U.S. locations.) Moreover, Texas Roadhouse also has two additional exciting opportunities in Bubba’s 33 — its family friendly sports restaurant that’s just beginning to ramp up its store count — and Jaggers, a fast-casual chicken and burgers concept. Should these nascent restaurant chains perform well, Texas Roadhouse could have well more than a decade of solid growth still ahead.
These long-term expansion plans align nicely with the multi-decade investment horizons of middle-aged investors. And as Texas Roadhouse’s revenue and profits climb steadily in the coming years, so, too, should its dividend payments and stock price — all of which makes it a stock 50-year-old investors may wish to consider.