Some investors, especially novice investors, are under the impression that successful investing should be overly complex. stores, 33% and International Franchise, 6%.ĭomino’s is the largest pizza restaurant chain in the world, with approximately 20,000 stores located across 90 different markets.Īlmost all stores globally are franchised. (DPZ) is a multinational pizza restaurant chain.įounded in 1960, Domino’s is now an $11 billion (by market cap) major QSR player that employs nearly 9,000 people.įY 2022 revenue can be broken down across three main segments: Supply chain, 61% U.S. With all of this in mind, let’s take a look at a high-quality dividend growth stock that appears to be undervalued right now… Domino’s Pizza, Inc. It’s an easy-to-follow valuation guide that can be used to estimate the fair value of just about any dividend growth stock you’ll run into. To that end, my colleague Dave Van Knapp put together Lesson 11: Valuation. Now, this does require one to have an understanding of valuation.īut this concept is also best when kept simple. Keeping thing simple by buying high-quality dividend growth stocks when they’re undervalued is a powerful way to build substantial wealth and passive income over the long run. It’s protection against the possible downside. This is a “buffer” that protects the investor against unforeseen issues that could detrimentally lessen a company’s fair value. Undervaluation introduces a margin of safety. Prospective investment income is boosted by the higher yield.īut capital gain is also given a possible boost via the “upside” between a lower price paid and higher estimated intrinsic value.Īnd that’s on top of whatever capital gain would ordinarily come about as a quality company naturally becomes worth more over time. This is because total return is simply the total income earned from an investment – capital gain plus investment income – over a period of time. That higher yield correlates to greater long-term total return potential. All else equal, a lower price will result in a higher yield. Price and yield are inversely correlated. This is relative to what the same stock might otherwise provide if it were fairly valued or overvalued. See, price only represents what you pay, but it’s value that represents what you get.Īn undervalued dividend growth stock should provide a higher yield, greater long-term total return potential, and reduced risk. Investing in the right businesses at the right valuations is key. Suffice it to say, living below my means and investing in simple-to-understand but high-quality businesses was a big part of my success. My Early Retirement Blueprint explains exactly how I was able to retire so early in life. That’s my real-money portfolio, and it produces enough five-figure passive dividend income for me to live off of.ĭividend income has been covering my expenses for years now, which allowed me to retire in my early 30s. I’ve been keeping it simple by buying high-quality dividend growth stocks for years. Generally speaking, these are the easy-to-understand, highly visible products and/or services that we all commonly use. This reliable, rising profit is produced when a business is selling great products and/or services. We’re talking about dividend growth stocks.Ī dividend growth stock represents equity in a business that pays its shareholders reliable, rising dividends.Īnd how do reliable, rising dividends get funded? This list has compiled invaluable information on hundreds of US-listed stocks that have raised dividends each year for at least the last five consecutive years. You can find many of these businesses on the Dividend Champions, Contenders, and Challengers list. Indeed, some of the world’s very best businesses are very easy to understand. The legendary investor Peter Lynch looked for business models that could be boiled down into a crayon drawing by a child.Īnd if it’s good enough for one of the greatest investors of all time, it’s good enough for the rest of us. Truth be told, it’s better to keep it simple. People new to investing think that the big returns can be found in risky, complex areas of the market. There’s a natural tendency to assume that complicated must be good. Becoming a successful investor can be, in some ways, counterintuitive.
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