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12/17 05:35
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Dividend Payment: Domino's Pizza Enterprises Limited will pay a dividend of A$0.215 on October 3rd, marking a reduction from the previous year's dividend. Despite this cut, the dividend yield stands at 5.1%, providing a boost to shareholder returns.
Stock Price Decline: The company's stock price has decreased by 36% over the last three months, which has contributed to the increased dividend yield, although this decline is concerning for investors.
Dividend Sustainability: The company is currently unprofitable and is distributing most of its free cash flow as dividends, which is considered an aggressive strategy. This raises concerns about the sustainability of future dividend payments.
Earnings Growth Forecast: Over the next 12 months, earnings per share (EPS) is projected to grow by 129.3%. However, if the dividend continues at its current rate, the company may pay out several times its earnings, potentially straining its balance sheet.
Dividend History: Domino's has a long history of dividend payments, with an annual payment of A$0.492 in 2015 and a recent payment of A$0.77. This reflects a growth rate of 4.6% per annum over the past decade, although the dividend has been cut at least once, which diminishes its attractiveness as an income investment.
EPS Decline: The company's EPS has fallen by approximately 33% annually over the past five years. Unless EPS improves, dividend payments may face pressure, although the upcoming year shows potential for recovery.
Dividend Viability: The current dividend appears to be unsustainable, leading to its recent cut. The company's inconsistent dividend history and declining EPS suggest it may not be a strong candidate for income-focused investors.
Market Perception: Investors are advised to consider various factors beyond dividend payments when evaluating the company. Domino's has been flagged with two warning signs, including one that is particularly concerning, indicating potential risks for investors.
