Readers hoping to buy Domino's Pizza Enterprises Limited (ASX:DMP) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Domino's Pizza Enterprises' shares before the 2nd of September in order to receive the dividend, which the company will pay on the 3rd of October.

The company's next dividend payment will be AU$0.215 per share, on the back of last year when the company paid a total of AU$0.77 to shareholders. Last year's total dividend payments show that Domino's Pizza Enterprises has a trailing yield of 5.1% on the current share price of AU$15.08. If you buy this business for its dividend, you should have an idea of whether Domino's Pizza Enterprises's dividend is reliable and sustainable. So we need to investigate whether Domino's Pizza Enterprises can afford its dividend, and if the dividend could grow.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Domino's Pizza Enterprises reported a loss last year, so it's not great to see that it has continued paying a dividend. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Dividends consumed 75% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

Check out our latest analysis for Domino's Pizza Enterprises

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.ASX:DMP Historic Dividend August 29th 2025

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Domino's Pizza Enterprises reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

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Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Domino's Pizza Enterprises has lifted its dividend by approximately 4.6% a year on average.

Remember, you can always get a snapshot of Domino's Pizza Enterprises's financial health, by checking our visualisation of its financial health, here.

The Bottom Line

Has Domino's Pizza Enterprises got what it takes to maintain its dividend payments? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Domino's Pizza Enterprises.

So if you're still interested in Domino's Pizza Enterprises despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. To help with this, we've discovered 2 warning signs for Domino's Pizza Enterprises (1 is potentially serious!) that you ought to be aware of before buying the shares.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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