Companies can reward their shareholders by distributing some of their profits to them as dividends, and many investors like receiving them. If you're on the hunt for attractive dividend-paying stocks to buy now, you might consider Domino's Pizza (NYSE: DPZ), which has boosted its payouts for a dozen straight years.
How many shares of Domino's Pizza would you need to own to receive $1,000 in annual dividends? The math is pretty simple.
Image source: Getty Images.
Doing the math
Domino's currently pays a quarterly dividend of $1.51 a share. While its board of directors has a track record of increasing those payouts -- indeed, they are up by more than 600% since 2012 -- in the interest of making conservative calculations, let's assume that the distributions will stay constant from here. That works out to $6.04 a year.
Dividing $1,000 by $6.04 equals about 166 shares. Domino's stock closed at about $465 on Dec. 10. Multiplying the 166 shares by $465 works out to a $77,190 investment.
Known for its reasonable prices, convenient locations, and fast delivery, Domino's has continued to open new restaurants at a reasonable pace despite its already massive footprint.
It has posted same-store sales increases for 30 straight years, and it's on track to do so again in 2024. In its fiscal third quarter, which ended on Sept. 8, comps increased 3% at U.S. restaurants and 0.8% internationally. Its earnings growth slowed, however. Operating income, after factoring out foreign exchange rate effects, grew by 5.7%.
If you're looking primarily for a stock that will provide you with a reliable income stream, you can find higher dividend yields than Domino's 1.3%. That's only slightly above the 1.2% average yield of the S&P 500 -- the benchmark large-cap index. However, given Domino's low 33% payout ratio, it can easily afford to continue raising its dividend payments.
Should you invest $1,000 in Domino's Pizza right now?
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Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Domino's Pizza. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
