Domino’s Pizza: This Berkshire-Backed Dividend Dynamo Is a Buy

Just before stepping down as CEO of Berkshire Hathaway (NYSE:BRK-A | BRK-A Price Prediction)(NYSE:BRK-B), Warren Buffett made a few quiet but telling changes to his portfolio. While Berkshire remained a net seller of stocks overall in a market many view as frothy and overvalued, the Oracle of Omaha (or perhaps his successor Greg Abel) still found deeply discounted opportunities worth buying. 

One standout addition was Domino’s Pizza (NYSE:DPZ). Berkshire built a nearly 10% stake over six straight quarters of purchases, culminating in a $1.4 billion position that now ranks among its notable holdings. In a sea of high valuations, Buffett spotted a cash-gushing franchise powerhouse trading well below its potential — a classic value play with durable competitive advantages.

Domino’s Dominated the 2010s Growth Era

For much of the 2010s, Domino’s was a fabulous growth stock. The company perfected its delivery model long before the rest of the industry caught on, expanding globally while same-store sales climbed steadily. The pandemic supercharged everything: locked-down consumers turned to contactless delivery, and Domino’s already-dominant app and logistics network captured massive market share. Order volume exploded, international stores multiplied, and the stock rewarded early investors handsomely.

The Post-Pandemic Hangover Hits Hard

When Covid restrictions faded, demand normalized sharply. Consumers returned to offices and restaurants, dialing back the convenience premium they once paid. At the same time, hyperinflation — fueled by massive government stimulus checks and the misnamed Inflation Reduction Act — squeezed household budgets. Price-conscious diners quickly traded down or ate out less. 

Domino’s stock plunged from its pandemic highs. While it has clawed back much of the lost ground, the shares still trade below their all-time peak and sit almost 9% lower over the past year. The most recent earnings report also missed analyst expectations on the bottom line, adding to near-term pressure.

Yet behind the temporary turbulence lies a dividend story few companies can match. Domino’s has been a fantastic dividend stock to own, growing the payout at a tremendous 19% compound annual growth rate for at least the past decade. Just weeks ago the board approved another raise — 14.4% higher — marking the 14th consecutive year of increases. That reliability, paired with strong free-cash-flow generation from its franchise-heavy model, keeps income investors coming back even when the share price wobbles.

Key Takeaway

The broader pizza space is flashing rebound signals. Papa John’s (NASDAQ:PZZA) is reportedly in advanced discussions for a buyout by private-equity firm Irth Capital at $47 per share — a premium that values the chain around $1.5 billion. Papa John’s stock jumped 19% on the news yet still trade roughly 17% below the offer price, hinting at arbitrage upside and a renewed appetite for pizza assets. 

While that deal excitement is real, I agree wholeheartedly with Buffett: Domino’s Pizza is still the superior pizza shop to own. Its unmatched delivery infrastructure, global scale, consistent dividend growth, and fortress-like brand give it durable advantages that should drive both capital appreciation and rising income for years ahead. In a frothy market, Buffett’s favorite pizzeria looks like the smartest slice on the menu.