Dividends for Domino's Pizza Group: What You Need to Know Before August 15

2 min read | August 12, 2024 09:00 AM AEST | By Team Kalkine Media

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Domino's Pizza Group plc, a prominent player in the Retail sector, is approaching its ex-dividend date, which is set for the next three days. The ex-dividend date is crucial because it determines which shareholders are eligible to receive the upcoming dividend payment. To qualify for the dividend, shareholders must be on the company’s books by the record date, which falls one business day after the ex-dividend date. Since the stock is set to go ex-dividend on August 15, investors who purchase shares on or after this date will not receive the dividend. The payment will be made on September 27.

The upcoming dividend is set at UK£0.035 per share. Over the past year, Domino's Pizza Group (LSE:DOM) distributed a total of UK£0.10 per share. This represents a trailing yield of approximately 3.6% based on the current share price of UK£2.944. When considering dividends, it’s important to evaluate whether the payments are sustainable. In this context, examining both profit coverage and cash flow is essential.

Domino's Pizza Group paid out 56% of its earnings in dividends last year, which aligns with the average payout ratio among companies. Additionally, the company distributed 57% of its free cash flow as dividends, a figure that falls within a typical range. This indicates that the dividend is supported by both earnings and cash flow, suggesting it is sustainable.

In terms of earnings, Domino's Pizza Group has seen a modest annual increase of 3.7% in earnings per share over the past five years. Despite this steady growth, the company already distributes a significant portion of its earnings. Although there is potential for increasing the payout ratio, a higher payout can sometimes limit a company's future growth prospects.

Examining historical dividend increases, Domino's Pizza Group has raised its dividend by an average of 7.1% per year over the last decade. This consistent increase in dividends, coupled with growing earnings, reflects a commitment to rewarding shareholders.

Potential for Dividend Stability

Domino's Pizza Group has demonstrated a stable approach to dividend payments, supported by both profit and cash flow. While earnings per share have grown modestly and the dividend payout ratio is reasonable, other options may offer more compelling prospects for dividend income.

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