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Could Domino’s Pizza’s Dividends Increase in 2016?

Ralph Nathan

Slice of the Pie: Could Domino's Pizza Continue Its Run in 2016?

(Continued from Prior Part)

Dividends

Domino’s Pizza (DPZ) paid a dividend of $0.31 in 4Q15, which brings the dividend for fiscal 2015 to $1.24. This total for 2015 represents a growth of 24% from the $1 in fiscal 2014. Analysts are expecting dividends for fiscal 2016 to reach $1.50, a growth of 22.5% from 2015.

Capital allocation policy

Over the course of fiscal 2015, Domino’s Pizza (DPZ) purchased $738.6 million in shares. In the first three quarters of the year, the company repurchased 1.3 million shares for $138.6 million, at an average share price of $107.10. In October 2015, the board of directors authorized an $800 million share repurchase program, which replaced the previous $200 million program. On October 27, 2015, the company received and retired approximately 4.9 million shares at an average share price of $105.50. As the final settlement of DPZ’s accelerated share repurchase program, the company is expected to receive and retire additional shares by the end of 1Q16.

Dividend yield

As of February 26, DPZ was trading at a forward yield of 1.1%. During the same period, Papa John’s (PZZA), YUM! Brands (YUM), and Starbucks (SBUX) were trading at forward yields of 1.1%, 2.3%, and 1.1% respectively. You could gain exposure to DPZ by investing in the iShares Russell Mid-Cap ETF (IWR), which has invested 0.13% in DPZ.

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