1 00:00:00,200 --> 00:00:02,800 Welcome back everyone. We have a big video to get into 2 00:00:02,800 --> 00:00:05,400 today. I just added a brand-new 3 00:00:05,400 --> 00:00:09,000 dividend-paying company into my portfolio that I've never owned 4 00:00:09,000 --> 00:00:12,200 before and I'm excited to go over it and share my investment 5 00:00:12,200 --> 00:00:14,600 thesis on this company. I'll go ahead and jump right 6 00:00:14,600 --> 00:00:16,300 into it and reveal which one it is. 7 00:00:16,400 --> 00:00:19,400 It's in the restaurant category. Here, you might notice the Emoji 8 00:00:19,400 --> 00:00:20,600 change. That's right. 9 00:00:20,600 --> 00:00:24,400 It's Domino's Pizza. Domino's Pizza is the new 10 00:00:24,400 --> 00:00:28,100 dividend growth holding in my portfolio and I'm excited to go 11 00:00:28,100 --> 00:00:29,600 over why I just bought into this. 12 00:00:30,000 --> 00:00:33,900 Open e and why I'll continue to buy into it at today's price or 13 00:00:33,900 --> 00:00:35,900 below this price. So in this video, we're going to 14 00:00:35,900 --> 00:00:39,100 go over an overview of dominoes and I'll let you know my thought 15 00:00:39,100 --> 00:00:42,200 process behind this, why I'm picking this company to buy 16 00:00:42,200 --> 00:00:45,600 instead of so many Alternatives. I think there's a lot of things 17 00:00:45,600 --> 00:00:48,700 that investors overlooked when they're looking at an investment 18 00:00:48,700 --> 00:00:50,500 in dominoes. So we have a lot to get to in 19 00:00:50,500 --> 00:00:52,100 this episode. If you like this type of 20 00:00:52,100 --> 00:00:55,200 content, you can consider subscribing to the channel and 21 00:00:55,200 --> 00:00:58,300 following along for free. I share my progress of this 22 00:00:58,300 --> 00:01:02,700 portfolio every single Week by week with complete, transparency 23 00:01:02,700 --> 00:01:04,599 for free. Now, let's go ahead and Jump 24 00:01:04,599 --> 00:01:07,200 Right In before we jump in a domino specifically. 25 00:01:07,200 --> 00:01:10,100 I just want to mention that the portfolio has made significant 26 00:01:10,100 --> 00:01:13,800 gains over just the past week. In fact, in the one-week period 27 00:01:13,800 --> 00:01:16,900 were up three point nine. Five percent that beats out. 28 00:01:16,900 --> 00:01:20,600 The S&P 500, a lot of companies in my portfolio have been on 29 00:01:20,600 --> 00:01:22,700 incredibly good. Runs we have my biggest 30 00:01:22,700 --> 00:01:25,700 position. Apple that's up, almost 20% in 31 00:01:25,700 --> 00:01:29,200 just the past 15 days. That is an incredibly good run. 32 00:01:29,300 --> 00:01:32,700 And I'm now a I almost 25,000 dollars in gains apples. 33 00:01:32,700 --> 00:01:34,700 A massive free cash flow generative company. 34 00:01:34,700 --> 00:01:36,400 That does incredible amounts of BuyBacks. 35 00:01:36,400 --> 00:01:39,700 It pays a dividend as a wide moat has great brand value. 36 00:01:39,900 --> 00:01:42,200 And a lot of other things that I like in this company, the 37 00:01:42,200 --> 00:01:46,200 valuation is moving up to a less attractive period. 38 00:01:46,300 --> 00:01:48,500 So although this company has gone up in price and I'm still 39 00:01:48,500 --> 00:01:51,200 bullish on it. I'm not doing any more buys at 40 00:01:51,200 --> 00:01:53,300 the current price. I was buying Apple when it was 41 00:01:53,300 --> 00:01:56,600 ninety dollars a share and then when it dip back down from 150 42 00:01:56,600 --> 00:01:59,800 to 125. So, my buys are at 90 and 120. 43 00:02:00,300 --> 00:02:03,800 Another company, my portfolio that I consider to be top 44 00:02:03,800 --> 00:02:05,900 quality one of the best companies in the world. 45 00:02:06,000 --> 00:02:08,800 That's not a significant run is Costco. 46 00:02:08,900 --> 00:02:11,200 Costco, is another company that just defies the odds? 47 00:02:11,200 --> 00:02:13,400 This one goes up like anti-gravity. 48 00:02:13,600 --> 00:02:16,700 It goes up like a rocket. It never seems to stop in the 49 00:02:16,700 --> 00:02:22,000 past one year. Costco is up 65 percent, 65 50 00:02:22,000 --> 00:02:24,800 percent in the past trailing year, consider the fact that 51 00:02:24,800 --> 00:02:27,400 that's about the same returns as Tesla. 52 00:02:27,600 --> 00:02:29,800 Tesla has a 72 percent return over the past. 53 00:02:29,900 --> 00:02:32,800 Trailing year, but Tesla also doesn't pay dividends which 54 00:02:32,800 --> 00:02:36,300 aren't being factored in here. Costco, pays both quarterly 55 00:02:36,300 --> 00:02:38,100 dividends. And once in awhile, they pay 56 00:02:38,100 --> 00:02:41,100 huge special dividends. And the reason that I highlight 57 00:02:41,100 --> 00:02:45,100 this is just to illustrate that big boring brand names of 58 00:02:45,100 --> 00:02:48,900 seemingly well-established companies like Costco can have 59 00:02:48,900 --> 00:02:52,400 incredibly attractive returns. They can have the returns of 60 00:02:52,400 --> 00:02:55,500 growth like companies like Tesla, so you don't have to 61 00:02:55,500 --> 00:02:59,100 venture in to only a specific group of companies to have 62 00:02:59,100 --> 00:03:04,200 incredibly Of returns Costco's, posting 65 percent returns as a 63 00:03:04,200 --> 00:03:06,500 warehouse. So, when I look at my portfolio, 64 00:03:06,500 --> 00:03:09,800 I'm trying to find companies like apple and Costco companies 65 00:03:09,800 --> 00:03:12,200 that are boring. They're predictable their free 66 00:03:12,200 --> 00:03:14,300 cash flow generative, they're highly durable. 67 00:03:14,300 --> 00:03:17,400 Meaning they have a big moat, they're unlikely to be disrupted 68 00:03:17,400 --> 00:03:19,600 and the last thing of course is we want to find them at 69 00:03:19,600 --> 00:03:22,200 attractive valuations. Now, having said that, I want to 70 00:03:22,200 --> 00:03:24,800 highlight why I think Domino's is one of these companies. 71 00:03:24,800 --> 00:03:27,200 So let's go ahead and dive in with my overview. 72 00:03:27,200 --> 00:03:29,800 This is the comprehensive overview of domino. 73 00:03:29,900 --> 00:03:33,000 Those as an investment will start off with the first thing 74 00:03:33,000 --> 00:03:35,400 here. Domino's is a simple and 75 00:03:35,400 --> 00:03:39,200 predictable business simple. And predictable means that the 76 00:03:39,200 --> 00:03:41,100 outcome is very well predictable. 77 00:03:41,100 --> 00:03:42,600 You know, what's going to happen. 78 00:03:42,600 --> 00:03:46,000 There's not a ton of variables with this company and the 79 00:03:46,000 --> 00:03:49,600 product that they sell, which is pizza is something that really 80 00:03:49,600 --> 00:03:52,700 never goes out of style, it can't be disrupted. 81 00:03:52,700 --> 00:03:56,300 No startup is going to invent a new pizza, that changes the game 82 00:03:56,300 --> 00:03:59,200 for pizza, because pizzas something that likely everyone 83 00:03:59,200 --> 00:04:02,200 loves And it's been around forever and I don't see this 84 00:04:02,200 --> 00:04:04,300 ever-changing. If we consider for a moment, 85 00:04:04,300 --> 00:04:08,300 what pizza even is. It's basically, just do spread 86 00:04:08,300 --> 00:04:11,300 out with yummy stuff, put on it and then baked. 87 00:04:11,300 --> 00:04:14,700 That's really all it is. It's not anything specific. 88 00:04:14,900 --> 00:04:17,000 It's turned into something specific where people think of 89 00:04:17,000 --> 00:04:20,200 the pepperoni pizza, but if you think of it, just as do a stuff 90 00:04:20,200 --> 00:04:23,700 put on, I think it illustrates how versatile Pizza is and with 91 00:04:23,700 --> 00:04:26,300 how many cultures and people that can work with, you can have 92 00:04:26,300 --> 00:04:28,900 red sauce, you can have white sauce, you can have cheese or no 93 00:04:28,900 --> 00:04:29,700 cheese. You can have pepper. 94 00:04:29,900 --> 00:04:31,300 Roni. You can have chicken. 95 00:04:31,400 --> 00:04:34,100 You can have beef and pork and everything else, or you could 96 00:04:34,100 --> 00:04:36,600 take out all of the meat and throw an entire salad on top of 97 00:04:36,600 --> 00:04:38,400 the pizza. Some people love that crazy 98 00:04:38,400 --> 00:04:41,700 version of pizza or the combo pizzas, but really when it comes 99 00:04:41,700 --> 00:04:45,700 down to it, there's not too many people that dislike every type 100 00:04:45,700 --> 00:04:47,600 of pizza. That's just something that I 101 00:04:47,600 --> 00:04:50,700 don't see that often and I don't think that's going to change any 102 00:04:50,700 --> 00:04:53,500 time in the future Pizza. Something that will always be 103 00:04:53,500 --> 00:04:56,000 around because the product is extremely versatile. 104 00:04:56,100 --> 00:04:58,500 Now, the next point is where I think investors get lost. 105 00:04:58,500 --> 00:04:59,800 This is where investors look at this. 106 00:04:59,900 --> 00:05:05,300 Company incorrectly Domino's is a pure franchising company which 107 00:05:05,300 --> 00:05:08,600 means that all of their locations are operated as 108 00:05:08,600 --> 00:05:11,900 individual businesses with a franchise owner. 109 00:05:12,200 --> 00:05:15,700 And the company itself, really doesn't own any of the land or 110 00:05:15,700 --> 00:05:19,900 any of those businesses. All they do is they license. 111 00:05:20,000 --> 00:05:23,500 They license their IP to these franchise owners and they 112 00:05:23,500 --> 00:05:25,500 collect fees from those franchisees. 113 00:05:25,900 --> 00:05:28,300 So it is an asset light business. 114 00:05:28,500 --> 00:05:31,300 Domino's doesn't have to only Own all these locations. 115 00:05:31,400 --> 00:05:34,400 Domino's doesn't really have to deal with all the employees that 116 00:05:34,400 --> 00:05:37,300 individual franchise owners deal with all of that. 117 00:05:37,500 --> 00:05:41,100 And all the franchise owners at least above. 90 percent of them 118 00:05:41,400 --> 00:05:44,400 have actually worked at a Domino's as just a low-end 119 00:05:44,400 --> 00:05:46,500 employee. At one point, they've worked as 120 00:05:46,500 --> 00:05:48,800 somebody that makes pizza. They work to somebody at a 121 00:05:48,808 --> 00:05:51,100 franchise itself. They know the business, the 122 00:05:51,100 --> 00:05:54,000 understand the business and they work up in the ranks, become a 123 00:05:54,008 --> 00:05:57,000 manager to really understand it and then they become a franchise 124 00:05:57,000 --> 00:05:58,400 owner. So I think it's a pretty cool 125 00:05:58,400 --> 00:05:59,700 thing. That all the people that own 126 00:05:59,700 --> 00:06:02,200 these Franchises are people that really just worked at the 127 00:06:02,200 --> 00:06:05,200 company at one point, they're not big wig business people. 128 00:06:05,300 --> 00:06:08,100 There people running it as kind of a small business but this 129 00:06:08,100 --> 00:06:10,200 model also has a lot of benefits. 130 00:06:10,400 --> 00:06:14,700 First of all, it's asset light. So Domino's Works more like umg, 131 00:06:14,800 --> 00:06:18,500 Universal Music Group, just creating music and Licensing it. 132 00:06:18,700 --> 00:06:22,100 Then they do a normal company with a ton of physical assets, 133 00:06:22,400 --> 00:06:24,900 they work more similar to Marriott. 134 00:06:25,100 --> 00:06:27,800 A lot of people think of Marriott is the hotel company. 135 00:06:27,800 --> 00:06:30,400 Oh, Marriott owns, thousands of Hotels. 136 00:06:30,500 --> 00:06:32,300 Well, that's incorrect. Marriott. 137 00:06:32,300 --> 00:06:36,700 Actually owns only seven of the 7,000 hotels with their name on 138 00:06:36,700 --> 00:06:39,300 it. They are also an IP company 139 00:06:39,400 --> 00:06:42,500 similar to Dominoes, they just have a method of doing things. 140 00:06:42,500 --> 00:06:44,800 They have their brand name. They have their intellectual 141 00:06:44,800 --> 00:06:48,300 property, which they license out to these physical buildings. 142 00:06:48,500 --> 00:06:51,500 They license out to these hotels and they collect fees. 143 00:06:51,800 --> 00:06:55,400 So, Marriott doesn't own hotels and Domino's doesn't own the 144 00:06:55,400 --> 00:06:57,500 physical buildings, or the physical assets. 145 00:06:57,700 --> 00:07:00,600 They are a fee collector and I think It's a great business 146 00:07:00,600 --> 00:07:02,100 model. So I think right here, this 147 00:07:02,100 --> 00:07:03,900 should change the way that you view Domino's. 148 00:07:04,100 --> 00:07:07,200 The product that they really sell the product at the company 149 00:07:07,200 --> 00:07:10,200 really sells is, its intellectual property. 150 00:07:10,300 --> 00:07:12,600 That's what you're investing in when you invest in dominoes 151 00:07:12,800 --> 00:07:16,500 their name, their license their technology, their process of 152 00:07:16,500 --> 00:07:18,900 doing things. All the physical assets are 153 00:07:18,900 --> 00:07:21,400 owned by other people. Another thing that I think is 154 00:07:21,400 --> 00:07:24,700 worth mentioning here is I put down no unions. 155 00:07:24,900 --> 00:07:28,500 I think it's very unlikely that dominoes will have an issue with 156 00:07:28,500 --> 00:07:30,800 unions like we're seeing with Starbucks. 157 00:07:31,100 --> 00:07:33,600 Have you ever wondered why Starbucks is being targeted with 158 00:07:33,600 --> 00:07:38,500 unions and not McDonald's or Burger King or Domino's or many 159 00:07:38,500 --> 00:07:41,000 other companies that actually don't pay their employees as 160 00:07:41,000 --> 00:07:45,000 well as Starbucks Starbucks, is probably the best in terms of 161 00:07:45,000 --> 00:07:48,400 pay an employee benefits yet. They're the ones being targeted 162 00:07:48,400 --> 00:07:52,000 by unions and that is specifically because Starbucks 163 00:07:52,000 --> 00:07:55,100 is an easy target. Most Starbucks locations. 164 00:07:55,100 --> 00:07:58,300 In fact, almost all of them are owned by Starbucks Corporation. 165 00:07:58,500 --> 00:08:02,000 So they all have the same Team owner and that makes the path 166 00:08:02,000 --> 00:08:05,100 for unionization very simple with a company. 167 00:08:05,100 --> 00:08:07,000 That is a pure franchising company. 168 00:08:07,200 --> 00:08:11,300 You have tens of thousands of separate owners of each location 169 00:08:11,600 --> 00:08:14,700 and that makes it incredibly difficult to put together a wide 170 00:08:14,700 --> 00:08:17,800 Union, the logistics of it are incredibly difficult. 171 00:08:18,100 --> 00:08:21,500 So I see it as a very small chance of dominoes having the 172 00:08:21,500 --> 00:08:25,600 same Union issues that Starbucks has, it could happen, but I 173 00:08:25,608 --> 00:08:28,200 think it's very unlikely. But again the important takeaway 174 00:08:28,200 --> 00:08:30,900 here for investors, if you're investing Ting in dominoes what 175 00:08:30,900 --> 00:08:33,700 you're investing in is their intellectual property and their 176 00:08:33,700 --> 00:08:36,799 ability to sell it to franchise owners, you're not really 177 00:08:36,799 --> 00:08:39,700 investing in the physical assets, the locations, the 178 00:08:39,700 --> 00:08:42,000 stores you're investing in their IP. 179 00:08:42,000 --> 00:08:44,900 Here's another mistake that I constantly see people making 180 00:08:44,900 --> 00:08:47,400 when they look at an investment and Domino's, let's just be 181 00:08:47,400 --> 00:08:50,600 clear here, Domino's is a low-end pizza maker. 182 00:08:50,700 --> 00:08:52,500 That's what the business is Domino's. 183 00:08:52,500 --> 00:08:56,300 Consistently outperforms, all other low-end, Pizza makers. 184 00:08:56,600 --> 00:08:59,100 And if you're trying to do research on dominoes and you 185 00:08:59,100 --> 00:09:02,100 compare a Those pizza. There's some high-end local 186 00:09:02,100 --> 00:09:04,500 Artisan pizza place. You're making a mistake. 187 00:09:04,700 --> 00:09:05,800 You're comparing it to something. 188 00:09:05,800 --> 00:09:09,900 That's not its competitor. They sell convenient cheap 189 00:09:09,900 --> 00:09:12,600 consistent experience in Low End Pizza. 190 00:09:12,600 --> 00:09:16,100 And by low on Pizza, I don't mean that as an insult, I just 191 00:09:16,100 --> 00:09:17,600 mean it as what they're targeting. 192 00:09:17,700 --> 00:09:21,200 Their targeting value, cheap pizza right on their website. 193 00:09:21,200 --> 00:09:24,900 The biggest thing they have highlighted is the price, not 194 00:09:24,900 --> 00:09:28,000 the pizza, but the price and what they show is that you're 195 00:09:28,000 --> 00:09:31,000 going to get a very good value. You for what you're ordering. 196 00:09:31,200 --> 00:09:34,900 So again, comparing this experience to your local 197 00:09:34,900 --> 00:09:38,100 Artisan, pizza joint, and the comments of people sing. 198 00:09:38,400 --> 00:09:41,300 Well, my local pizza joint is way better than dominoes, of 199 00:09:41,300 --> 00:09:43,800 course it is, but it's more expensive and it's not 200 00:09:43,800 --> 00:09:45,700 convenient. The places you should be 201 00:09:45,700 --> 00:09:49,500 comparing, dominoes to are not your local pizza maker, but 202 00:09:49,500 --> 00:09:52,600 places like Little Caesars. Domino's Pizza Hut. 203 00:09:52,800 --> 00:09:56,600 Those are their competitors. Domino's is like the fast-food 204 00:09:56,600 --> 00:09:59,700 of pizza. They offer, local convenient. 205 00:09:59,800 --> 00:10:03,300 In pizza at an extremely good value and of those competitors. 206 00:10:03,300 --> 00:10:05,200 Papa, John's Pizza Hut and Little Caesars. 207 00:10:05,400 --> 00:10:08,400 Domino's has consistently outperformed doll of them, and 208 00:10:08,400 --> 00:10:11,400 they show no signs of slowing down in that outperformance. 209 00:10:11,400 --> 00:10:14,500 In fact, on that note of dominoes competitors, almost all 210 00:10:14,500 --> 00:10:16,100 of them have increased their prices. 211 00:10:16,100 --> 00:10:19,300 Just recently, more than Domino's has you have Little 212 00:10:19,300 --> 00:10:22,000 Caesars charging $8 for they're hot and ready. 213 00:10:22,200 --> 00:10:24,700 This is a higher priced in dominoes so those price 214 00:10:24,700 --> 00:10:27,000 increases of their competitors, actually makes the value 215 00:10:27,000 --> 00:10:29,900 proposition of dominoes better. Another thing to mention is That 216 00:10:29,900 --> 00:10:32,300 Domino's has their own delivery infrastructure. 217 00:10:32,300 --> 00:10:35,200 They've been in delivery forever, they know, delivery 218 00:10:35,300 --> 00:10:38,700 extremely well they're good at it and that also makes it so 219 00:10:38,700 --> 00:10:41,400 that they're not reliant on door dashing ubereats. 220 00:10:41,600 --> 00:10:44,100 And I'm sure you've seen the Articles or you've used or 221 00:10:44,100 --> 00:10:47,600 dashing ubereats and seen the amount of fees that they charge, 222 00:10:47,600 --> 00:10:51,000 they charge huge margins for every single order, which 223 00:10:51,000 --> 00:10:52,800 dramatically increases the prices. 224 00:10:52,900 --> 00:10:55,600 If you were to ubereats or doordash Papa John's or Little 225 00:10:55,600 --> 00:10:57,400 Caesars. Your pizza is going to be a lot 226 00:10:57,400 --> 00:11:00,200 more expensive than if you just order it from I was in have 227 00:11:00,200 --> 00:11:02,900 their own delivery people deliver it, so by Domino's 228 00:11:02,900 --> 00:11:05,200 owning their own delivery infrastructure. 229 00:11:05,300 --> 00:11:07,000 That gives them a slew of benefits. 230 00:11:07,000 --> 00:11:10,300 Not only do they save the money off of the incredibly High fees 231 00:11:10,300 --> 00:11:13,600 that doordash and ubereats charge, but they also can ensure 232 00:11:13,600 --> 00:11:16,000 a more consistent and accurate delivery. 233 00:11:16,300 --> 00:11:19,300 I'm sure if you use doordash or ubereats, you're used to getting 234 00:11:19,300 --> 00:11:23,000 the wrong thing or missing items that happens frequently, or you 235 00:11:23,000 --> 00:11:26,000 get cold food because they don't store it in something to keep it 236 00:11:26,000 --> 00:11:30,000 warm by Domino's, having their own delivery drivers you No, the 237 00:11:30,000 --> 00:11:33,000 order is going to be correct and warm when it arrives, because 238 00:11:33,000 --> 00:11:35,800 they're not passing the food off to some unknown third party, 239 00:11:35,800 --> 00:11:38,600 that hires gig workers. Now, moving on, we have another 240 00:11:38,600 --> 00:11:42,200 subject of recessions. There's been a lot of chatter 241 00:11:42,200 --> 00:11:44,900 online about the upcoming recession. 242 00:11:45,200 --> 00:11:48,100 I'm sure you've heard about it. The inverted yield curve, the 243 00:11:48,100 --> 00:11:51,200 high inflation that typically proceeds recessions, the 244 00:11:51,200 --> 00:11:54,200 increasing interest rates, all of this stuff increases the 245 00:11:54,200 --> 00:11:58,100 chance of recession. Now, I'm firmly in the camp that 246 00:11:58,100 --> 00:12:01,000 predicting a recession is very Cold, most people will be 247 00:12:01,000 --> 00:12:03,000 inaccurate and I don't think it's something that you should 248 00:12:03,000 --> 00:12:05,600 worry about predicting. But I also operate under the 249 00:12:05,600 --> 00:12:08,900 assumption that eventually, we will have a recession, it is 250 00:12:08,900 --> 00:12:12,400 unavoidable at some point, our economy will enter into a 251 00:12:12,400 --> 00:12:14,500 recession. And so every investment I make 252 00:12:14,500 --> 00:12:17,500 is one that I don't only want to survive a recession, but I 253 00:12:17,500 --> 00:12:20,400 wanted to actually flourish during a recession when I look 254 00:12:20,400 --> 00:12:23,000 at restaurants and the type of companies that will do well 255 00:12:23,000 --> 00:12:25,800 during recessions. I think it will be the ones that 256 00:12:25,800 --> 00:12:29,400 offer the cheapest product, the most convenience and the value. 257 00:12:29,700 --> 00:12:33,400 Opposition will go very far. I look at Pizza as one of the 258 00:12:33,400 --> 00:12:36,700 better categories because I think that pizza feeds a lot of 259 00:12:36,700 --> 00:12:40,600 people for cheap. If you order one, $8 or $10, 260 00:12:40,600 --> 00:12:44,600 Domino's Pizza, you can feed a family of five that is a very 261 00:12:44,600 --> 00:12:47,400 cheap value proposition. So although it's difficult to 262 00:12:47,400 --> 00:12:50,200 predict how dominoes will do during a recession, my 263 00:12:50,200 --> 00:12:52,800 prediction. My assumption is that it will do 264 00:12:52,800 --> 00:12:55,500 much better than most other food joints if we enter into a 265 00:12:55,508 --> 00:12:57,100 recession. Now, these are all different 266 00:12:57,100 --> 00:12:59,500 fundamental qualitative aspects of the company. 267 00:12:59,700 --> 00:13:02,500 Go ahead and look at some other things that are more numbers 268 00:13:02,500 --> 00:13:04,000 driven. What is this company actually 269 00:13:04,000 --> 00:13:06,200 doing with their dividends and share BuyBacks? 270 00:13:06,200 --> 00:13:09,600 One thing about dominoes is that it has a low starting yield of 271 00:13:09,600 --> 00:13:12,400 around one percent, if you're buying it right now, so that 272 00:13:12,400 --> 00:13:14,900 might turn off some Gibbon and investors that are looking for 273 00:13:14,900 --> 00:13:17,600 higher starting yields. But you have to keep in mind 274 00:13:17,608 --> 00:13:21,900 that Domino's has a fast growing dividend much faster than the 275 00:13:21,900 --> 00:13:24,100 market average. In fact, it's been averaging 276 00:13:24,100 --> 00:13:28,000 around 17 to 20 percent dividend growth for the past five years. 277 00:13:28,400 --> 00:13:31,100 So this company has a lot of free cash flow that they use to 278 00:13:31,100 --> 00:13:33,900 fund a fast growing dividend to put that in perspective. 279 00:13:33,900 --> 00:13:37,300 If we look at their dividend history hair back in 2013, it 280 00:13:37,300 --> 00:13:41,200 was 20 cents per quarter per share, just 20 cents their most 281 00:13:41,200 --> 00:13:45,000 recent one was $1.10. So in less than a ten year 282 00:13:45,000 --> 00:13:49,000 period, they 5x their dividend five times, their dividend in a 283 00:13:49,008 --> 00:13:52,200 10-year period and they're not really slowing that down too 284 00:13:52,200 --> 00:13:55,700 much their last quarter, they raised it by 17 percent on on 285 00:13:55,700 --> 00:13:59,200 top of that their payout, ratios 27.7%. 286 00:13:59,400 --> 00:14:01,900 That's Very low payout ratio that just means that their 287 00:14:01,900 --> 00:14:05,200 dividend payments are very well covered and likely to grow 288 00:14:05,200 --> 00:14:08,000 further in the future. They have a lot of wiggle room 289 00:14:08,000 --> 00:14:09,700 here. In fact, they could increase 290 00:14:09,700 --> 00:14:12,700 their dividend by two or three times and still function just 291 00:14:12,700 --> 00:14:14,500 fine. So, in terms of a div, a 292 00:14:14,500 --> 00:14:16,800 Domino's does have a lower starting yield. 293 00:14:16,800 --> 00:14:20,200 But again, I'm investing for the next five to ten years and they 294 00:14:20,200 --> 00:14:22,500 grow their dividend at a very rapid Pace. 295 00:14:22,600 --> 00:14:25,500 Now, on the subject of returning cash back to shareholders. 296 00:14:25,900 --> 00:14:29,500 Domino's does some of it through dividends but they do a lot of 297 00:14:29,500 --> 00:14:31,000 it. It through BuyBacks their 298 00:14:31,000 --> 00:14:33,900 BuyBacks are absurd. Let me go ahead and show you an 299 00:14:33,900 --> 00:14:35,900 example of how absurd their BuyBacks are. 300 00:14:36,200 --> 00:14:38,200 Let's go ahead and go to the shares outstanding here. 301 00:14:38,500 --> 00:14:42,200 Last quarter they had 36 point, 1 million shares outstanding. 302 00:14:42,300 --> 00:14:44,900 And if you go to the same quarter a year ago, the at 303 00:14:44,900 --> 00:14:48,000 thirty eight point, eight million shares outstanding, that 304 00:14:48,000 --> 00:14:52,200 means that the company bought back roughly 7% of their entire 305 00:14:52,200 --> 00:14:55,500 market cap. In just one year, one year's 306 00:14:55,500 --> 00:14:59,100 time, they bought back 7% of their entire market cap. 307 00:14:59,300 --> 00:15:02,400 That's Free cash flow. They generate the company not 308 00:15:02,400 --> 00:15:05,500 only pays a growing one percent dividend yield but they're 309 00:15:05,500 --> 00:15:07,700 buying back. Huge chunks of their market cap 310 00:15:07,700 --> 00:15:10,600 every single year and the last four quarters weren't anything, 311 00:15:10,600 --> 00:15:12,800 really even special. They've been doing this for a 312 00:15:12,808 --> 00:15:15,700 long period of time. You notice the share count going 313 00:15:15,700 --> 00:15:19,700 down dramatically that is because Domino's is devouring, 314 00:15:19,800 --> 00:15:22,600 their own share count, they're buying back more and more of 315 00:15:22,600 --> 00:15:25,500 their company, every single quarter which has so many 316 00:15:25,500 --> 00:15:28,300 benefits for the company. It makes it easier for them to 317 00:15:28,300 --> 00:15:30,900 pay a growing dividend because there's less shares outstanding 318 00:15:30,900 --> 00:15:32,700 that they have to pay dividends for each share. 319 00:15:32,900 --> 00:15:35,900 It also makes it so that their earnings on a per share basis, 320 00:15:36,100 --> 00:15:38,400 go through the roof which improves the valuation of the 321 00:15:38,400 --> 00:15:40,500 company. So these BuyBacks benefit the 322 00:15:40,500 --> 00:15:44,000 investors to a dramatic extent and just recently May of last 323 00:15:44,000 --> 00:15:47,800 year Domino's increase their by back by another billion they're 324 00:15:47,800 --> 00:15:51,900 spending another billion just on BuyBacks not even on dividends 325 00:15:51,900 --> 00:15:54,900 keep in mind that this is a fourteen point eight billion 326 00:15:54,900 --> 00:15:58,600 dollar market cap company. So 1 billion dollars of BuyBacks 327 00:15:58,700 --> 00:16:02,100 is a Amount of their share. So if you're investing in 328 00:16:02,100 --> 00:16:05,000 dominoes, one of their biggest buyers is going to be the 329 00:16:05,000 --> 00:16:07,100 company themselves. They generate such a 330 00:16:07,100 --> 00:16:09,900 consistently high and growing free cash flow, every single 331 00:16:09,900 --> 00:16:13,100 quarter that they can continue to do these share BuyBacks and 332 00:16:13,100 --> 00:16:16,000 dividends for the long-term foreseeable future. 333 00:16:16,000 --> 00:16:18,800 So I see the BuyBacks and the dividends as a continued 334 00:16:18,800 --> 00:16:21,700 long-term theme for Domino's. They're going to continue to 335 00:16:21,708 --> 00:16:23,900 raise their dividend, that's almost a certainty. 336 00:16:24,100 --> 00:16:26,900 And they're going to continue to buy back their shares and not 337 00:16:26,900 --> 00:16:29,900 only does this help the earnings per share, it helps us Stock 338 00:16:29,900 --> 00:16:33,200 price go up, but it also is somewhat of downside protection. 339 00:16:33,500 --> 00:16:37,600 If Domino's was to fault 30 or 40 percent in stock price, these 340 00:16:37,600 --> 00:16:41,300 BuyBacks would go a lot further, they be buying back 10 and 15% 341 00:16:41,300 --> 00:16:43,800 of the market cap instead of seven percent. 342 00:16:43,900 --> 00:16:47,200 So the BuyBacks become more attractive as the stock price 343 00:16:47,200 --> 00:16:49,600 goes down. That is downside protection. 344 00:16:49,700 --> 00:16:52,200 Now continuing on, we get to some of the risk factors here. 345 00:16:52,500 --> 00:16:55,400 They do have a lot of debt Domino's carries more debt than 346 00:16:55,400 --> 00:16:58,600 most companies that's been their Capital allocation strategy so 347 00:16:58,600 --> 00:17:01,400 far. Get the cash flow ratio is about 348 00:17:01,400 --> 00:17:04,800 eight times which is a bit more than most companies that's 349 00:17:04,800 --> 00:17:07,599 around the same way that McDonald's operates. 350 00:17:07,599 --> 00:17:10,500 It is true that they hold a lot of debt that's only because they 351 00:17:10,500 --> 00:17:12,700 figure they'll get better returns by buying back their own 352 00:17:12,700 --> 00:17:15,900 stock and paying dividends than paying down the low interest 353 00:17:15,900 --> 00:17:17,800 rate debt. If interest rates go up 354 00:17:17,800 --> 00:17:21,099 dramatically dominoes will be forced to funnel some of their 355 00:17:21,099 --> 00:17:24,800 free cash flow into debt instead of share BuyBacks and they'll do 356 00:17:24,800 --> 00:17:26,900 that if their cost of capital goes up. 357 00:17:27,000 --> 00:17:29,500 So I do consider this somewhat of a risk or at least a Down 358 00:17:29,600 --> 00:17:32,300 side of the company. They do carry a lot of debt but 359 00:17:32,300 --> 00:17:34,200 I think it's something that they're more than capable of 360 00:17:34,200 --> 00:17:36,500 handling. I don't see them in any type of 361 00:17:36,500 --> 00:17:38,500 distress situation quite possibly. 362 00:17:38,500 --> 00:17:41,000 The biggest risk factor for Domino's are all the near-term. 363 00:17:41,000 --> 00:17:43,100 Pressures. We have higher inflation. 364 00:17:43,400 --> 00:17:45,600 Higher inflation leads to high labor costs. 365 00:17:45,600 --> 00:17:48,700 So Domino's does have to hire employees and the high labor 366 00:17:48,700 --> 00:17:51,700 costs actually eat away at their margin and I think that's the 367 00:17:51,700 --> 00:17:53,700 biggest concern for this company. 368 00:17:53,900 --> 00:17:56,400 What are their margins going to look like in a year? 369 00:17:56,600 --> 00:17:58,500 Will they continue to get compressed? 370 00:17:58,600 --> 00:18:01,700 Or we actually And that's a question that a lot of investors 371 00:18:01,700 --> 00:18:04,300 are asking themselves if they continue to struggle finding 372 00:18:04,300 --> 00:18:07,100 employees, and they have to raise wages a lot for their 373 00:18:07,100 --> 00:18:09,900 employees that could compress their margins. 374 00:18:10,200 --> 00:18:13,400 The thing that's working in the benefit of dominoes, is their 375 00:18:13,400 --> 00:18:16,000 competitors have already raised prices more than them. 376 00:18:16,100 --> 00:18:18,800 So that does give them some wiggle room to raise prices 377 00:18:18,900 --> 00:18:21,200 without losing their customers to competition. 378 00:18:21,300 --> 00:18:24,000 So, this is a basic overview of some of the qualitative stuff I 379 00:18:24,000 --> 00:18:26,700 like about dominoes, but let's go ahead and look more carefully 380 00:18:26,700 --> 00:18:29,000 at some of the numbers here. What we're looking at here is an 381 00:18:29,000 --> 00:18:30,700 investment. Tool called qual trim, that 382 00:18:30,700 --> 00:18:32,500 gives you fundamentals of the company. 383 00:18:32,600 --> 00:18:34,700 If you want to check this out, you can join the patreon. 384 00:18:34,900 --> 00:18:37,900 It's part of the patreon, but we can look at is the revenue 385 00:18:37,900 --> 00:18:40,900 growth of this company. It's very consistent over a long 386 00:18:40,900 --> 00:18:44,100 term basis. Last quarter was actually lower 387 00:18:44,200 --> 00:18:47,500 than the previous quarter, which was fully expected by the 388 00:18:47,500 --> 00:18:49,900 company when we were right in the middle of lockdowns. 389 00:18:49,900 --> 00:18:53,300 In 2020, of course, ordering pizza was very popular. 390 00:18:53,300 --> 00:18:56,800 So this is a bit of an anomaly to grow this much in one year. 391 00:18:57,100 --> 00:19:00,200 But if we look at it on a two-year basis this Quarter 392 00:19:00,200 --> 00:19:02,700 compared to the same quarter, two years ago, it's 393 00:19:02,700 --> 00:19:05,800 significantly higher so Domino's still continues. 394 00:19:05,800 --> 00:19:09,500 Its long-term growth Trend, even with the anomaly of 2020. 395 00:19:09,700 --> 00:19:11,800 Another thing that I'll highlight is that the store 396 00:19:11,800 --> 00:19:17,200 count for Domino's is 18,000 848, that is their total stores 397 00:19:17,200 --> 00:19:19,700 across the entire globe. And just last quarter, they 398 00:19:19,700 --> 00:19:24,000 opened up 468 new stores that's in a three-month period in the 399 00:19:24,000 --> 00:19:28,400 year of 2021. They opened up 1204 stores so 400 00:19:28,400 --> 00:19:31,400 they're opening up over 1,000 stores a year. 401 00:19:31,400 --> 00:19:34,000 Basically, this is a way of saying the company has a lot of 402 00:19:34,008 --> 00:19:36,400 growth ahead of it. It is still somewhat in the 403 00:19:36,400 --> 00:19:39,500 middle of its growth curve and I anticipate them opening up, 404 00:19:39,500 --> 00:19:42,300 thousands and thousands and thousands of more stores. 405 00:19:42,400 --> 00:19:44,200 So the revenue growth will continue. 406 00:19:44,400 --> 00:19:47,700 The ibadah growth is very consistent and very strong since 407 00:19:47,700 --> 00:19:51,300 2017 the free cash flow. Growth has been always positive 408 00:19:51,300 --> 00:19:54,300 and very consistently growing over time and this is of course 409 00:19:54,300 --> 00:19:56,600 really what we're looking for in all of their income. 410 00:19:56,700 --> 00:19:59,900 Consistent growing free, cash flow, their net income Models 411 00:19:59,900 --> 00:20:02,300 both their ibadah and their free cash flow growth. 412 00:20:02,300 --> 00:20:06,500 Like I pointed out they do carry a lot of debt over 5.1 billion 413 00:20:06,800 --> 00:20:10,300 and they only have one hundred and forty eight million on the 414 00:20:10,308 --> 00:20:12,100 balance sheet as of last quarter. 415 00:20:12,400 --> 00:20:15,000 So this company doesn't like the keep cash on hand. 416 00:20:15,100 --> 00:20:17,000 They probably know that inflation is working against 417 00:20:17,000 --> 00:20:18,500 them. They have a steady stream of 418 00:20:18,508 --> 00:20:21,500 free cash flow head of them. Instead of keeping this cash on 419 00:20:21,500 --> 00:20:24,500 hand they do BuyBacks and dividends that simply what they 420 00:20:24,500 --> 00:20:26,600 do at their Capital, allocation strategy. 421 00:20:26,900 --> 00:20:29,700 If you look at the options here, this has been the right 422 00:20:29,700 --> 00:20:31,800 decision. This has created the most 423 00:20:31,800 --> 00:20:34,800 shareholder value possible and like we've seen their Dividends 424 00:20:34,800 --> 00:20:36,600 are growing. Very steadily fifteen to twenty 425 00:20:36,600 --> 00:20:39,500 percent year-over-year. Their share BuyBacks are very 426 00:20:39,500 --> 00:20:43,100 aggressive and their earnings per share is result is extremely 427 00:20:43,100 --> 00:20:45,500 consistent and very rapidly growing. 428 00:20:45,500 --> 00:20:48,400 This is growing faster than most tech companies and like you may 429 00:20:48,400 --> 00:20:51,400 have heard before Domino's has actually out performed, the 430 00:20:51,400 --> 00:20:54,000 majority of tech companies. So that's a basic overview of 431 00:20:54,008 --> 00:20:56,300 the fundamentals and some of the qualities of the company. 432 00:20:56,600 --> 00:20:58,800 Let's go ahead and talk about valuation because right now 433 00:20:58,800 --> 00:21:04,000 dominoes, At around a 27, P/E ratio, and that's kind of pricey 434 00:21:04,100 --> 00:21:05,800 that's around the same price has Apple. 435 00:21:06,000 --> 00:21:07,800 So why am I buying dominoes out of 27? 436 00:21:07,800 --> 00:21:11,800 P/E ratio, when there's lots of other companies at a lower P/E 437 00:21:11,800 --> 00:21:14,300 ratio, dominoes is a little bit more expensive. 438 00:21:14,300 --> 00:21:16,900 Let me go ahead and throw this graphic on the stream, showing 439 00:21:16,900 --> 00:21:20,700 Domino's historical valuation with my own drawings on top of 440 00:21:20,700 --> 00:21:22,200 it. So I know it's not the most 441 00:21:22,200 --> 00:21:24,800 professional looking but I promise this illustrates an 442 00:21:24,800 --> 00:21:28,500 important point, the black line going through the horizontal 443 00:21:28,500 --> 00:21:32,400 axis, that is A line of the PE Ratio that it currently trades 444 00:21:32,400 --> 00:21:34,000 at. So right now dominoes trades at 445 00:21:34,000 --> 00:21:37,500 a 27 price to earnings on a forward-looking basis. 446 00:21:38,100 --> 00:21:41,900 Now, what I did was I drew all the area that Domino's has, 447 00:21:41,900 --> 00:21:47,600 historically traded Above This PE ratio since 2014, the 448 00:21:47,600 --> 00:21:51,000 majority of the time Domino's has traded well Above This 449 00:21:51,000 --> 00:21:54,700 forward, P/E ratio, well, above it and there's only a few times 450 00:21:54,700 --> 00:21:57,200 throughout history that it's dropped down below it, there is 451 00:21:57,200 --> 00:22:01,800 a tiny bit during 2017 from A month or two, there is a decent 452 00:22:01,800 --> 00:22:05,800 amount of time in 2019 but other than that there's only a few 453 00:22:05,800 --> 00:22:09,300 blips, there's not many times at Domino's trades below, its 454 00:22:09,300 --> 00:22:12,100 current PE ratio. It's just simply growing too 455 00:22:12,100 --> 00:22:15,900 fast to trade below that and there's ample times many times 456 00:22:15,900 --> 00:22:17,800 throughout history were dominoes trades. 457 00:22:17,800 --> 00:22:21,600 Well, Above This PE ratio, in fact, on average, Domino's trade 458 00:22:21,600 --> 00:22:25,900 somewhere above a 30 trades, between a 30 and a 32, sometimes 459 00:22:25,900 --> 00:22:30,600 it gets as high as a 38 or 39 Ford PE Ooh, this is a company 460 00:22:30,600 --> 00:22:33,400 that's gotten all the way up to a 40 Ford P/E ratio. 461 00:22:33,500 --> 00:22:36,400 So when I look at this and I try to determine does Domino's have 462 00:22:36,400 --> 00:22:39,200 more upside or more downside. I think. 463 00:22:39,200 --> 00:22:42,400 Historically, looking at has far more upside, the growth of 464 00:22:42,400 --> 00:22:45,700 nominals remains very strong, the mode of the company remains 465 00:22:45,700 --> 00:22:48,200 very strong. They still have a huge leg up 466 00:22:48,200 --> 00:22:51,200 over all of their competitors and I expect their earnings 467 00:22:51,200 --> 00:22:53,500 growth to continue at a very brisk Pace. 468 00:22:53,700 --> 00:22:57,600 They're going to have 12 %, EPS gains, I think for the very long 469 00:22:57,600 --> 00:23:00,000 term future. So when I look at the Upside and 470 00:23:00,000 --> 00:23:03,300 downside and I look at it historically I see a lot more 471 00:23:03,300 --> 00:23:07,200 upside right now than downside. There is a chance that Domino's 472 00:23:07,200 --> 00:23:10,500 could lose their lead and maybe it would trade down to 2013 473 00:23:10,500 --> 00:23:13,200 levels, but I think that's very unlikely. 474 00:23:13,400 --> 00:23:16,200 When I look at the potential downside, there's only a few 475 00:23:16,200 --> 00:23:19,000 times in its history. It's ever gone down that much. 476 00:23:19,100 --> 00:23:22,300 And I think the reason that the PE Ratio right now is as low as 477 00:23:22,300 --> 00:23:26,000 it currently is, is because of the scary environment, where in 478 00:23:26,200 --> 00:23:29,400 we have high inflation, we have increasing interest rates, we 479 00:23:29,400 --> 00:23:32,100 have Have lots of near-term threats to the economy and to 480 00:23:32,100 --> 00:23:34,800 the stock market. But typically that's been a very 481 00:23:34,800 --> 00:23:37,400 good time to buy. So right now, I've you dominoes 482 00:23:37,400 --> 00:23:40,800 as an asymmetric bet, with more upside than downside, the dip 483 00:23:40,800 --> 00:23:43,600 finder, which is a tool. I develop that illustrates the 484 00:23:43,600 --> 00:23:46,700 price versus that 200, a simple moving average shows that 485 00:23:46,700 --> 00:23:49,200 Domino's is in one of the biggest dips of all, the 486 00:23:49,200 --> 00:23:51,400 companies that I look at, it's right there. 487 00:23:51,400 --> 00:23:55,000 Next to Starbucks and Disney. This company has gone through a 488 00:23:55,000 --> 00:23:58,600 significant dip, its down 15% below, its 200-day, moving 489 00:23:58,600 --> 00:24:00,600 average. Look at the graph here, over, 490 00:24:00,600 --> 00:24:03,800 just the past year. The company was just recently at 491 00:24:03,800 --> 00:24:08,400 560 a share 560, that's what it was at in January and then it 492 00:24:08,400 --> 00:24:12,100 traded down 27% to $400 and below. 493 00:24:12,100 --> 00:24:15,300 So, it seems like investors have changed their minds overnight 494 00:24:15,300 --> 00:24:18,300 about dominoes, and I simply think it's unwarranted. 495 00:24:18,300 --> 00:24:20,800 I think the company is going through a dip, that's not 496 00:24:20,800 --> 00:24:24,400 entirely Justified, so that's basically it Dominoes is a very 497 00:24:24,400 --> 00:24:27,200 high quality free cash flow generative company with an 498 00:24:27,200 --> 00:24:29,300 attractive growth story and it pays a fast. 499 00:24:29,500 --> 00:24:32,100 Growing dividend, it does massive BuyBacks and I think 500 00:24:32,100 --> 00:24:35,800 that it's currently undervalued having said that I only have two 501 00:24:35,800 --> 00:24:38,000 thousand four hundred dollars in this company. 502 00:24:38,300 --> 00:24:40,300 So it is a smaller holding of mine. 503 00:24:40,500 --> 00:24:43,900 If it does trade around its current price, I will continue 504 00:24:43,900 --> 00:24:47,000 to buy more of this company. I'm going to be funding that 505 00:24:47,100 --> 00:24:50,400 through some new deposits as I get more money and do continual 506 00:24:50,400 --> 00:24:53,600 deposits into my portfolio. But also through dividends, I 507 00:24:53,600 --> 00:24:57,800 just received eighty dollars for Microsoft $10 from Target, $60 508 00:24:57,800 --> 00:25:01,900 from Home Depot, 37, Is from Texas, Roadhouse $30 from 509 00:25:01,900 --> 00:25:07,300 Schwab's, large cap, growth ETF, and $253 from SC HD, all of this 510 00:25:07,300 --> 00:25:09,300 money. Every single bit of it, the four 511 00:25:09,300 --> 00:25:11,900 hundred dollars plus went into dominoes. 512 00:25:12,000 --> 00:25:14,000 That is the compounding effect that you see what these 513 00:25:14,000 --> 00:25:17,100 dividend-paying companies. I love this stuff, they pay out 514 00:25:17,100 --> 00:25:19,600 their free cash flow and dividends and I can use that 515 00:25:19,600 --> 00:25:21,700 money. Not just to reinvest back into 516 00:25:21,700 --> 00:25:25,100 their Holdings, which may not be the absolute best value, but to 517 00:25:25,100 --> 00:25:27,900 find other companies that I think are currently offering 518 00:25:27,900 --> 00:25:30,600 more attractive value. That's exactly what I'm doing in 519 00:25:30,600 --> 00:25:32,500 this situation. If I look at my upcoming 520 00:25:32,500 --> 00:25:35,100 dividend schedule, I have another slew of dividends coming 521 00:25:35,100 --> 00:25:40,500 in one of them on the 7th of April, is $406 from Vici so I'm 522 00:25:40,508 --> 00:25:42,400 going to get paid that cash from Vici. 523 00:25:42,700 --> 00:25:45,800 And if Domino's is still at an attractive price, if it hasn't 524 00:25:45,800 --> 00:25:49,000 shot up in price, this is going back into dominoes so the 525 00:25:49,000 --> 00:25:52,000 compounding effect continues I'll be using the free cash 526 00:25:52,000 --> 00:25:54,200 flow. This portfolio generates to buy 527 00:25:54,200 --> 00:25:57,100 more dividend-paying companies which generate more free cash 528 00:25:57,100 --> 00:25:59,700 flow and so on and so forth. So that's my thoughts for Now, 529 00:25:59,700 --> 00:26:01,600 hope you enjoyed and I'll see you in the next one.