Consumers are clearly buying more pizzas during COVID, driving a 45% jump in Domino’s dividend.
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How did Domino’s perform in FY21?
Domino’s delivered a well-rounded result despite the uncertain and challenging conditions caused by COVID-19.
Network sales increased 14.6% year-on-year to $3.74 billion which helped underlying earnings Before Interest and Tax (EBIT) lift 27.2% to $293 million and net profit after tax surge 29.2% to $188.2 million.
The company said that it is “demonstrating sustained growth by retaining customers from the initial peaks of the pandemic, with a two-year cumulative Same Store Sales growth of 13.7%.”
During this period, Domino’s successfully opened 285 new stores, growing its stores network by 10.7%.
The company successfully surpassed its prior 3-5 year outlook goals, which includes growing its store network between 7-9% and increasing same-store sales growth between 3-6%.
The Domino’s share price initially opened flat on Wednesday, at $126.91. However, a flurry of buying activity throughout the day would rally the company’s shares to all-time highs of $135.76 by market close.
Domino’s dividend jumps 45%
The Board determined that it will increase its payout ratio from 70% to 80% in recognition of “this new phase in the Domino’s growth, and the expected free cash flow this will return”.
Domino’s declared a final dividend of 85.1 cents per share with a 70% franking, bringing its total dividend for FY21 to 173.5 cents per share.
At today’s prices, this represents a yield of 1.27%.
While 1.27% might not sound like much, the Domino’s share price has indeed rallied 53.5% year-to-date and up 76% in the last 12 months.
A small dividend on top of an outstanding share price performance is a win-win for shareholders.
Key dates for Domino’s dividend
The Domino’s share price will go ex-dividend on Wednesday, 25 August and paid out on Thursday, 9 September.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.